Sources of Finance and Capital Budgeting Techniques for Zylla Ltd

Business scenario for Individual
Report

INTRODUCTION
Decision taking is an essential part of all types of business organizations. In this
report, Zylla ltd is taken as an organization. The company provides ferries for the purpose of
crossing the river to the people, motor transports and products. This report provides the
insight of the expansion plan of the Zylla Ltd, sources of funds available for meeting its
current and non-current financial resources requirement. It also covers the whether the
company should acquire ferry or not.
MAIN BODY
Different sources of finance
Short Term Financing
It is very essential to have constant flow of working capital for a successful business.
Outflow is the part of every business in respect to wages, buying the raw material, marketing,
advertising and various different types of indirect cost (Altaf and Ahmad, 2019). The
different sources of short-term finance are discussed below.
Trade credit: Under this, credit is extended by the creditors and vendors of the raw
materials in the normal business operations. It is an essential way of getting the required
funds but before providing credit it analysis the credibility of the firm and the self-confidence
level of the creditors for securing trade credit. But the disadvantage of this method is that
supplier may price higher and may lead to losing the chance of getting better cash discount.
Customer advances: Under this, the company can make a policy or the system in
which the customers are required some part of the money in advance before selling the
products or providing services (Corelli, 2016). It is the cheap source of finance and can be
used while dealing with large orders.
Factoring services: Mostly the banks provide the factoring services by discounting
the bills received from the customers. The firms can get payment for the sales made on credit
and then bank is responsible for collecting the due amount from the customers.
Long-Term Financing
It refers to the requirement of funds for the longer duration more than a year which is
required for investment or expansion (Leon, 2019). Different sources of long-term finance are
stated below.
Issue of equity or debentures: for investing in the long-term ventures, businesses are
in need of large amount of funding which can be settled through issue of shares or