Cash Flow and Information System Implementation for Spencer Holidays - Assignment Example

Running Header: Spencer Holidays Analysis Cash Flow and Information System Implementation Analysis for Spencer Holidays College Part Q1 - Spencer Holidays Cash Flow Forecast Steadily rising budgeted sales figures of $38,620 in January up to $42600 in June reflects a 10% growth in sales revenue during the six months in review. The net outflows are regular and there fore it is most likely that a positive cash flow will be maintained in all the months during the period. The break down of the sales figures on the basis of both month and product predicts that there will be a healthy, steady growth of positive cash flow supported by 22% growth expected in weekend breaks sales and 19% in coach tours. A 5% growth in flydrive packages is also expected while a -12% decline in cruise packages is predicted. Although the sale of Cruises by Spenser Holidays is experiencing negative growth, this is a seasonal fluctuation and the company will be regaining this product sale in the second half of the year. The healthy status of the cash flow situation can be partly attributed to the newly implemented debtor management program where the credit periods are strictly maintained within its 14 days term. When looking at the main figures of Opening and Closing Balances in all months, no negative cash flow situations are anticipated. For all months under review, a positive net cash flow and a positive increase in the closing balance for each month can be noted. The increase in liquid cash from $10,000 to $202,565 at the end of the period indicates a high liquidity rate, which is 20 times more than what the initial status at the beginning of the period. This additional cash should be invested in interest earning deposits or considered for expansion capital. Net Cash flow for each of the months is rather regular if the bi monthly payments of rent are apportioned out monthly. Overall the company’s performance reflected through the healthy and positively incrementing cash flow status is highly satisfactory. Table 1 provides the 6-month cash flow statement and the figure 1 & 2 provides graphs of sales performance and Net cash flow details. Table 1 – Spencer Holidays’ Cash flow Budget for the six months of Jan- Jun 2006 Particulars January February March April May June Inflows:  Weekend Breaks 13,300 13,860 14,420 14,980 15,540 16,240 Coach Tours 9,600 9,960 10,320 10,680 11,040 11,400 Cruises 9,000 8,820 8,640 8,280 8,100 7,920 Fly Drive Holidays 6,720 6,720 6,880 6,880 7,040 7,040 Sales 38,620 39,360 40,260 40,820 41,720 42,600 Outflows:  Advertising 1,130 1,149 1,173 1,186 1,210 1,233 Administration 1,335 1,365 1,400 1,425 1,460 1,495 Office Rent 6,000   6,000   6,000   Electricity 600     600     Office manager 2,400 2,400 2,400 2,400 2,400 2,400 Managers Bonus     403 408 417 426 Total 11,465 4,914 11,376 6,019 11,487 5,554 Net Cash Movement 27,155 34,446 28,884 34,801 30,233 37,046 Opening Balance 10,000 37,155 71,601 100,485 135,286 165,519 Net Cash Movement 27,155 34,446 28,884 34,801 30,233 37,046 Closing Balance 37,155 71,601 100,485 135,286 165,519 202,565 Figure 1 – Cash Flow Trend of Spencer Holidays for Jan to Jun 2005 Period Figure 2 – Sales Revenue by Product Group for Jan to Jun 2005 Period Part 2 - Q1 - Types of Management Information Systems With the rapid developments in the filed of Information Technology, companies are making use of different information systems. Information systems as any other systems comprise of input, process and output functions. A computer-based management information system will comprise of main components as hardware, software, database, network, procedures and people (Turban, McLean & Wetherbe 2001). Operation support systems can include Transaction processing systems, Process control systems, Customer Relationship Management systems or Enterprise Collaboration systems. Management support systems may include Management information systems , Decision support systems and Executive Information Systems. Strategic information systems allow a firm to use its Information Technology to leverage a competitive advantage. Information Systems being used by Federal Express is an example of such a strategic information system. Recommended Type of IS system for Spencer Holidays Functional Business systems are IS systems, which integrate both the managerial decision making support systems with the operational support systems. Considering the operations of Spenser Holidays, the most appropriate Information System would be a Functional Business System. Such a system is designed to produce information and support decision making for various levels of management and various business functions as accounting, marketing and logistics as well as do transaction-processing activities (Obrien 2004). Different Users of the IS system within Spenser Holidays User groups within the company of an Information System includes Senior Management that would utilise the system for strategic information review and finance personnel utilizing the System for finance management & accounting. Marketing & front office personnel will use the system sales & marketing activities and customer relations work. The logistic personnel who are involved in planning and coordinating the tours will also be users of the system. HRM personnel will be also users of the system to perform its HRM functions. In future, Spence Holidays can incorporate a Geographic Information System with a Global Positioning System linked to its tour coaches, cars and other means of transport so that the position of vehicles at any time can be monitored. Such information can be used to position the company strategically ahead of its competitors, emphasizing the safety, reliability and assurance associated with real-time vehicle tracking facility associated with the tours. Tasks which would be performed with the IS system Strategic Management tasks will involve formulation of strategic business reports pertaining to sales performance, costs and financial indicators. Strategic forecasts, budget trends and what if scenario facilities will allow tasking related to strategic pricing and costing ad well as investment appraisals. Accounting tasks would include, order processing, managing accounts receivables & accounts payable activities, handling payroll and record keeping of the general ledger. Finance tasks involve cash flow management as well as forecasting cash flow so that company’s liquidity status can be ensured. The system will also facilitate budgeting and forecasting of sales, expenditure and formulate financial statements. Marketing & Sales functions of the system will perform interactive marketing, online booking, customer relationship management activities and market research activities. Automated booking and coordinating as well as online advertising will also be performed. Front Office staff will be able to utilise the system for computerized bookings and confirmations as well as checking real-time records of tour details, destinations, participant details. The system can also have real-time location details of the tour coaches, cruisers and cars. Logistic tasks which the system will perform includes the planning of seating capacities, arrangement of refreshments if included in the package, allocating tour coaches and coordinators as well as keeping track of luggage information. HRM tasks will involve employee record keeping, feeding attendance data to payroll calculations, and automating some of the aspects of performance appraisal where the system will facilitate the newly implemented peer review component of the appraisal system. Staff training will be offered online and all tour information and details facilitating the tour operators’ destination descriptions will be made available online. Part 2 – Q2 - Hardware requirements for Information System of Spenser Holidays. In order to establish the proposed Functional Business System at Spencer Holidays, the company would need an Intranet linked to the Internet. The hardware requirements include Network server with shared Hard Disk Capacity, PC Work Stations for each user of the system, POS terminals for the Front Office and Network Routers for Internet connectivity. If the system is incorporating the GIS module to track its vehicles and cruisers, then a satellite links and vehicle-tracking units consisting of locator and antenna will also be needed. In addition to the above hardware systems, a computer system needs peripheral devices. “Peripheral devices are the generic term referring to all input, output and secondary storage devices that are part of the computer system” (Obrien 2004). The required peripherals of the Spence Holliday’s system will include Printers, Video and & CD Rom Drives to provide tour information and pictures etc. Back up systems, Monitors, mounted in coaches and other group tours, PDA systems for coordination between head office. Software packages recommend for Spencer Tours. There are many functional business system software suited to specific functions of travel and tour operating businesses. Most such software will include separate modules for managing reservations, confirmed bookings, back office module, accounting modules and front office modules. Examples of such software include CARNAVAL, eBusinessoft, for tour operator, CruisePak, BoardingPass & Travel Box. CruisePak is cruise, tour, and general travel reservation management software. Travel Box software provides systems, which are geared to cater to main business areas of Pre Sales, Sales, Post Sales and Accounting. Modules cover various areas as Bookings, Accommodations, Tours, Cruise and Car Hires, which are tailor made to specific requirements of clients. References: CruisePak Travel Software For Agencies and Home Bases Agents. Retrieved on December 20 2005 from www.cruisepak.com Frankwoods, & Sangster, A. (1999). Business Accounting II. San Francisco: Financial Times Management. Kaplan, R. S. & Atkinson, A. (2001) Advance Management Accounting. New Jersey: Prentice-Hall Inc. O’Brien, J. (2002). Management Information Systems: Managing Information Technology in the Business Enterprise. 6th ed. New York: McGraw-Hill Inc. Turban, E., Mclean, E. & Wetherbe, J. (2003). Information Technology for Management. New York: John Wisely & Sons. Travel Box Software Solutions Cost Efficient Travel Agency and Tour Operator Products. Retrieved on December 20 2005 from www.codegen.it/travelbox Calculation Sheet – For Reference Sales Weekend Breaks Coach Tours Cruises Fly Drive Holidays Units Price Value Units Price Value Units Price Value Units Price Value Monthly Totals Jan 95 140 13,300 80 120 9,600 50 180 9,000 42 160 6,720 38,620 Feb 99 140 13,860 83 120 9,960 49 180 8,820 42 160 6,720 39,360 Mar 103 140 14,420 86 120 10,320 48 180 8,640 43 160 6,880 40,260 Apr 107 140 14,980 89 120 10,680 46 180 8,280 43 160 6,880 40,820 May 111 140 15,540 92 120 11,040 45 180 8,100 44 160 7,040 41,720 Jun 116 140 16,240 95 120 11,400 44 180 7,920 44 160 7,040 42,600 88,340 63,000 50,760 41,280 243,380 Advertising Weekend Breaks Coach Tours Cruises Fly Drive Holidays No. of ads Price Value No. of ads Price Value No. of ads Price Value No. of ads Price Value Monthly Totals Jan 95 4 380 80 3 240 50 6 300 42 5 210 1,130 Feb 99 4 396 83 3 249 49 6 294 42 5 210 1,149 Mar 103 4 412 86 3 258 48 6 288 43 5 215 1,173 Apr 107 4 428 89 3 267 46 6 276 43 5 215 1,186 May 111 4 444 92 3 276 45 6 270 44 5 220 1,210 Jun 116 4 464 95 3 285 44 6 264 44 5 220 1,233 2,524 1,575 1,692 1,290 7,081 Administration Weekend Breaks Coach Tours Cruises Fly Drive Holidays Units cost Value Units cost Value Units cost Value Units cost Value Monthly Totals Jan 95 5 475 80 5 400 50 5 250 42 5 210 1,335 Feb 99 5 495 83 5 415 49 5 245 42 5 210 1,365 Mar 103 5 515 86 5 430 48 5 240 43 5 215 1,400 Apr 107 5 535 89 5 445 46 5 230 43 5 215 1,425 May 111 5 555 92 5 460 45 5 225 44 5 220 1,460 Jun 116 5 580 95 5 475 44 5 220 44 5 220 1,495 3,155 2,625 1,410 1,290 8,480 Read More