Short and long term finances for Zylla Limited

Business Scenario for
Individual Report

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Short and long term finances for Zylla Limited..........................................................................1
Investment appraisal techniques along with recommendation of validity of new asset (ferry). .2
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
Investment appraisal is the procedure of checking relevancy of an investment in order to
help organisation in the process of decision making. The main objective of this report is to
recommend Zylla limited regarding the suitability in investing in a new ferry. Zylla limited is a
growing company which intend to invest in new ferry so that they can attain growth and
development in the business environment. This business provides river crossing services for
which they are investing in a new asset from which both short and long term sources of finance
and evaluated. In second section of this report, various investment appraisal techniques are
analysed for the purpose of mentioning the suitability of the investment in new ferry.
MAIN BODY
Short and long term finances for Zylla Limited
Every organisation whether small scale or large scale requires sources of finance to fulfil
their operational requirements. In the present case of Zylla limited, this company has
requirement for both short term and long term finance. This company requires short term finance
to fund their working capital and long term finance for capital expenditure. In order to assist this
company various short term and long term sources of finance are analysed below:
Bank over draft facility – This is a short term finance source which enable an organisation
to withdraw amount from their bank account by exceeding the balance limit (Prajogo and
Olhager, 2012). This source can be used by Zylla limited in which they do not have to pay any
interest and they can operate effectively by paying overdraft facility fees.
Short term bank loan – As its name suggests, this type of loan is acquired for short time
period usually less than one year. This source of finance allows organisations like Zylla limited
to procure funds from bank but the demerit in this case is that they have to pay a certain interest
rate against the loaned fund and also have to provide some guarantee to the bank.
Promissory note – This is another short term finance source in which organisation can
issue promissory notes to their trade partners to promise to pay a specific amount on future date.
By using this source, Zylla limited can effectively operate and fulfil its working capital
requirement without paying any interest.
Long term bank loan – This source of finance is used to fulfil the long term capital
requirement of an organisation. Zylla limited can use this source by which they can procure
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