Short and Long Term Sources of Finance and Investment Appraisal Techniques

Business Scenario for Individual Report

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Short term and long term sources of finance..............................................................................1
Investment appraisal techniques.................................................................................................2
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Zylla Limited is UK based company that operates ferries and provide the river crossing
services for the people, goods and vehicles across river. This company require the funds for
acquisition of ferry and pay for working capital needs of expansion (Singh and Wasdani, 2016).
In present report will be discuss about short and long term finance sources to fund an acquisition
of ferry and requirements of working capital of firm. Different investment appraisal techniques
and also viability of acquisition as well as operations of new ferry on the basis of effective
appraisal techniques.
MAIN BODY
Short term and long term sources of finance
Short term finance sources- This refers to loan and credit facility extended to company for less
than one year. It deals with raising required money for short period of time means few days to
one year. This is credit arrangement given to company to bridge gap among expenses and
income in short time period. In context to Zylla, short term source of finance helps business to
manage current liabilities like payment of wages and salaries to labours and also procurement of
inventory and raw materials (Gadenne, 2017). Different sources of finance are given below:
Commercial paper- It is form of financing includes short term basis promissory note
regarded as unsecured and sold in money market. They are mainly issued through large firms and
soled to the other companies, banks, pension funds etc. Zylla Ltd. can use commercial paper as
alternative financing source (Sanderatne, 2019).
Invoice discounting- It is short term finance where receivable invoices can discounted
with banks or third party. In this, bank will pay money to Zylla company during discounting and
gathers money from consumers when bill becomes due (Vinczeova and Kascakova, 2017).
Long term finance sources- It means financing through loan for team of more than the one year
through issuing the equity shares, long term loans, form of debt financing. It is done for large
size projects financing and also expansion of organisation. The long term financing is needed to
finance the long term project investment (Thurston and et. al., 2016). Some sources of long term
finance mention below:
Equity Shares- These are known as the ordinary shares and represents ownership capital
of firm. Holders of the equity shares are legal owners of firm. They have the unrestricted claim