• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Sources of Finance

Extracts from this document...

Introduction

Sources of Finance Task A Introduction Thomas Cook plc is a German owned company, who merged with MyTravel Group in June 2007. Every year, over 19 million people selected to travel with Thomas Cook plc from one of their 3,000 stores for making a holiday destination decision. The company employs over 33,000 people, with 97 aircrafts in operation. Being a plc, Thomas Cook must ensure that they are registered with the companies' house, and their shareholders attend to at least one meeting annually. Thomas Cook plc was introduced within the travel market in 1841, which began as a train company, and now has grown into a comprehensive travel business. It is now one of the top 4 travel companies, with the help of merging with 'My Travel'. Thomas Cook plc operates within a very competitive travel market due to the amount of consumers booking holidays increasing. ...read more.

Middle

Thomas Cook plc's packages are seasonally related, such as towards the summer the hotels will be located towards the beach, and during the winter season, hotels will be more closely to ski resort attractions. However, Thomas Cook plc's main competitor, Thomson (TUI) also provides their customers with luxurious and different holiday range packages, such as 18:30 club which attracts a large response from their customers. Why do businesses need finance? All businesses need finance to operate their daily activities. There are two main reasons for why all businesses need finance. One is for revenue expenditure, which are short term and help to keep the business functioning from day to day, such as paying the bills and staffs wages. The second is capital expenditure which is spending on those items which will help generate profits over the longer term, such as spending on fixed assets, and help with improvements to the business in ways such as the expansion of the premises, and research and development costs. ...read more.

Conclusion

When given a loan, Thomas Cook plc are guaranteed the finance, however loans come along with strict terms and conditions, such as the time they have to be paid back, which is usually at the end of each month, in instalments. Loans are usually tied in with assets of Thomas Cook plc's, such as their premises, or their aircrafts, which would mean these are at risk if any repayments are missed. The balance sheet in Source 1 illustrates that �4,126.8 million is spent towards intangible assets such as hotel. This large sum of finance borrowed for the assets was most likely to be through a long term loan, in which Thomas Cook would have a larger term to repay the debt they owe to the bank. A loan is appropriate for Thomas Cook plc as it offers them a larger amount of period to balance out the cashflow, and provide them with opportunities in order to come across techniques for speeding up cashflow coming into the business. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Accounting & Financial Management section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Accounting & Financial Management essays

  1. Advantages and Disadvantages of the various sources of finance available to businesses.

    Potential investors will seek background information on you and your business - they will closely scrutinise past results and forecasts and will probe the management team. The funding is committed to your business and your intended projects. Depending on the investor, the business may have to be subject to varying

  2. A2 Business CourseWork

    of a product to make, and a reasonable selling price of the product. Tesco will be no different the state of the economy and the impacts of the economy will have a huge bearing on Tesco's profit and tactics. To a company like Tesco it is crucial to be careful;

  1. Sources of Finance

    by a company containing an acknowledgement of indebtedness which is not secured by a mortgage or other properties (Samuels et al 1995). Debentures are backed only by the general creditworthiness and reputation of the issuer and documented by an agreement called indenture (Samuels et al 1995).

  2. Dear Ms C Walsh, Im writing to inform you about ...

    Another advantage could be that factors may give you useful information about the credit standing of your customers and they can help you to negotiate better terms with your suppliers. http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1073791093&type=RESOURCES * Overdraft facilities Overdraft facility is when you are allowed to be overdrawn up to a certain amount without being charged or having to pay direct debits etc.

  1. Sources of finance for a new business.

    They will all want interest to be paid back on the original amount borrowed. The higher the risk of the venture, the greater interest will be charged against the loan. Larger public limited companies are able to raise large amounts of capital by selling the debentures.

  2. Edecel Applied Business Unit 11 Finance Task B

    Thomas Cook may have customers waiting and not have any rooms or flights available, this would be a missed opportunities for Thomas Cook. This is why it is extremely important for them to get the balance between securing the hotels and flights, and the amount of customers.

  1. Edexcel Applied Business A2 unit 11 finance task A

    Therefore banks will be more willing to lend a public limited company a loan rather then other types of businesses. For example a bank may not to lend a partnership money as there will be a high risk of not collecting the money back in case the business fails as

  2. Justify a proposed comprehensive and integrated nancial service package that is appropriate for the ...

    He should pay the card debt and only use it for items he buys online so that he is protected if the item doesn’t arrive. David could do this by taking £1,000 out of his savings account because the interest rates in that account are very low compared to credit card interest which is high.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work