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Finance and Foundings in Tourism Industry

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Introduction

Finance and Funding in the Travel and Tourism Industry Group assignment Klebanovska Victoria, Zonova Anna TT 1 Alpine Centre 2009 Contents Introduction..................................................................................................................1 Analyses of financial statements..................................................................................1 The Balance Sheet........................................................................................................1 The Income Statement..................................................................................................3 Cash Flow Statement....................................................................................................3 The Statement of Owners Equity..................................................................................4 Conclusion...................................................................................................................5 References...................................................................................................................6 Introduction We are working in a consulting company for a travel and tourism industry. Our boss has provide us with the latest income statement of the organization in order for us to analyze its financial performance. To analyze the financial performance of the company the income statement is not enough, so we need to make a research for extra financial statements which can help us to complete our report. The basic purpose of financial statements is to assist users in evaluating the financial position, profitability, and future prospects of a business. Being able to understand financial statements does not necessary mean to be able to prepare them. To prepare a set of statements primarily a balance sheet and incomes statement, then we have advantage of being able to analyze the information in greater depth and, therefore, use it to enhance the results of a business operation. We need financial information to make rational decisions for the immediate or near future. The financial statements are sources of required information. Smart investors have always known that financial statements are the keys to every company. ...read more.

Middle

By category, each individual account, by name and its numerical balance, is shown at the end of a specific date, which is normally the ending date of an operating period. The income statement An income statement is a one-page financial statement which summarizes the profitability of the business entity over a specified period of time. The income statement shows how much revenue and profit a company has generated over a certain period. It also shows the net profit of loss incurred over a specific financial period, typically over a fiscal quarter or a year. Neither statement is better than the other - rather the financial statements are build to be used together to present a complete picture of a company's finances (Investopedia, Balance sheet, 2009). The purpose of the income statement is to show economic results of profit - motivated operations of a business over a specific operating period. The basic balance sheet and income statement cannot in themselves answer questions regarding cash inflows and cash outflows that have occurred during an operating period. Cash flow statement In financial accounting, a cash flow statement or statement of cash flows is a financial statement that shows a company's flow of cash. The money coming into the business is called cash inflow, and money going out from the business is called cash outflow. ...read more.

Conclusion

(Small Business guide, Statement of Changes in Equity, 2009) Most "outside" decisions makers use financial statements in making investment decisions - that is, selecting those companies in which they will invest resources or to which they will extend credit. Two factors of concern to creditors and investors are the solvency and profitability of a business organizations. Investors as well as creditors interested in the solvency of a business organization, but they are even more interested in its profitability. (Meigs&Meigs) Conclusion It is necessary to understand and analyze the financial statements of the company to see the financial situation: liquidity, current assets, liabilities, equity. Also, financial statements show efficiency of the business and profitability or loss.The managers of the companies should keep a database of a company's financial statements for the last five years and, separately, the last 12 quarters. Include the Cash Flow Statement, Balance Sheet, and Income Statement. By reviewing trends in the financial statements, you will have a broader understanding of the company's: * Financial health * Profitability * Cash balance and cash flow generation * Debt levels * Asset financing With this spreadsheet, you can then easily add calculations, determine ratios, and develop a benchmark of the company's performance and financial condition against its competitors. Maintain a separate spreadsheet for each company analyzed. Doing so will build a better picture of the company and its historical performance. ...read more.

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