Introduction This report will evaluate the various alternatives sources of finance available to fund the new project for Best city hotel; it will explain the various types, methods and classification of costs and their effect on pricing policies, within the tourism industry; Furthermore, the report will include a discussion on the role of management accountants within the context of a travel and tourism industry. In Management accounting, managers are provided with accounting information so that they are informed before making decisions on matters, which supports their management and the performance of roles in control within their organizations. “One simple definition of management accounting is the provision of financial and non-financial decision-making information to managers” Finding analysis Various alternatives sources of finance available to fund the new project According to the Modigliani-Miller Theorem 1953, it does not matter which source of finance you will use, as long as a profit is made. The theorem is the foundation of today’s corporate finance. Capital structure of a company is the way a company finances its assets. A company can finance its operations by either debt or equity, or different combinations of these two sources. Capital structure of a company can have majority of debt components or majority of equity, only one of the two components or an equal mix of both debt and equity (Modigliani and miller, 1953) Sources of finance
Managerial accounting provides essential data about the functions within the business. The reports that are provided by the managerial accountants focus on the performance of the business and the business environment. Managerial accounting is manager oriented and managerial accounting focus on the accounting duties of a manager. Managerial accounting is used on a day to day operation providing an analysis of cost and the cost benefits. Managerial accounting function as a source for the business developments and the capital budgeting. The primary concern with managerial accounting is to provide positive outcomes in the business production and the profit.
Management accounting is for commercial finance, analyzing past performance and projecting future results aiding in the commercial decision-making. This department defines and measures key targets needed to achieve for McDonald’s business strategy to be successful (McDonald’s Corporation, 2008).
Managerial accounting is defined as the activities carried out in a firm to provide its managers and other employees with financial and related information to help them make strategic, organizational, and operational decisions.
Managerial accounting involves planning, controlling and decision making processes that are very helpful in business major such as marketing, operations management and human resource management. For example, marketing managers make planning decisions related to allocating advertising dollars across various communication mediums and to staffing new sales territories. From a control standpoint, they may closely track sales data to see if a budgeted price cut is generating an anticipated increase in unit sales. Operations managers have to plan how many units to produce to satisfy anticipated customer demand. They also need to budget for operating expenses such as utilities, supplies, and labor costs. In terms of control, they monitor actual spending relative to the budget, and closely watch operational measures such as the number of defects produced relative to the plan. Human resource
As we discussed in class, every business is faced with these issues and they are important to managers making strategic decisions. One of the first things learned about business is that if there is no demand for a good or service, the firm that provides it will not continue to exist. Over time the hotel industry has continued to change with market conditions and make itself attractive to business
Describes at least three managerial accounting techniques available and their application within a business or organization:
Noreen, E.W. & Brewer, P. C. & Garrison, R. H. ( 2011). Managerial accounting for managers. Retrieved from
Feedback: Management accounting is the preparation and use of accounting information systems to achieve the organization's objectives by supporting decision makers inside the enterprise. LO 4
“The financial statements are management’s responsibility. The auditor’s responsibility is to express an opinion on the financial statements. Management is responsible for adopting sound accounting policies and for establishing and maintaining an internal control structure that will, among other things, record, process, summarize, and report
The two Novel laureates, Franco Modigliani and Metron Miller (here after called M-M) were the first to present a formal model in 1958 on valuation of capital structure in corporate finance theory and is still the cornerstone of modern corporate finance. MM were the first to take a sharp look at the relationship between Capital Structure and the cost of capital. In their seminal papers (1958, 1963), they states some propositions.
The first impression of the course managerial accounting for managers was that it would involve learning how to manage operations of a firm, especially in relation to its financial records and activities to ensure efficient and successful operation of a firm. I expected to learn how to deal with the final financial records and using them to perform an analysis of the records which will help to make informed decisions. It would also involve learning how to deal with the accounting records to make effective budget plans in considerations of resources available. My expectations of the course
The collaboration between the university professors and Nobel Prize winners, Franco Modigliani and Merton Miller in 1958 have resulted the first and one of the most important theories in the field of capital structure. Franco Modigliani and Merton Miller (MM) have developed a theory that helps us to understand how taxes and financial distress affect a company’s capital structure decision. There were different unclear issues that M&M theorem used their basis in building their assumption. For instance, would a change in financing mix increase the value of a company. There were many other issues taken into consideration which result the two main assumptions as well as there were many other assumptions added in the coming years after the M&M propositions, which have tried to complement
Already in 1958, Modigliani and Miller have pointed the discussion of capital structure towards the cost of debt and equity. According to their first proposition, in a world of no corporate taxes and with perfect markets, financial leverage has no effect on a firm’s value. In their second proposition, they state that the cost of equity equals a linear function defined by the required return on assets and the cost of debt (Modigliani and Miller, 1958).
According to Will S, Ray H, & Eric E.N. (2009), management accounting is a branch of accounting that is concerned with providing information to managers who direct and control the firm’s operations. Management directing function seeks to effectively use both the human and raw material wealth of a firm to achieve organizational set objectives on routine basis. Controlling function is the art of tele-guarding the activities of the organization to consistently fall in line with set objectives. Management accounting achieves this function through effective budgeting.
According to the Chartered Institute of Management Accountants (CIMA), Management Accounting is "the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information used by management to plan, evaluate and control within an entity and to assure appropriate use of and accountability for its resources. Management accounting also comprises the preparation of financial reports for non management groups such as shareholders, cr->ors, regulatory agencies and tax authorities" (CIMA Official Terminology)