Financial Decision for Zylla Limited: Short and Long Term Sources of Finance and Investment Appraisal Techniques

Financial decision

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1. Short and Long Term Sources to Finance:..............................................................................3
2. Evaluating various investment appraisal techniques and recommending on viability............4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................1

INTRODUCTION
Zylla Limited is a company that provides services for river crossing for people, vehicles
and goods across a river. The company owns various ferries to operate its business. The
company wants to expand its business and for the expansion purpose the management decides to
purchase a new ferry to cater the increasing demand for its services.
This report will highlight the various short term sources of finance to meet the working
capital requirement of the company. In addition, for acquiring the ferry some long term sources
to finance will be discussed in the report. Further the report will evaluate the project for
acquisition of ferry through various investment appraisal technique.
MAIN BODY
1. Short and Long Term Sources to Finance:
Short Term Sources
Factoring Services: Short term requirements of funds for working capital of Zylla
Limited can be meet through factoring services. Factoring Services is a process in which for
raising money the company sell its customer invoices to a bank or a funder (Shrotriya, 2019).
The lender evaluates the money that can be funded on the basis of the invoices, customer base of
the business.
Trade Credit: Through trade credit Zylla Limited can buy goods without paying for it
through cash or cheque immediately. It is a business to business agreement that allow Zylla
Limited to purchase goods from its suppliers and make payment at a later date. It is a type of
zero percent financing through which a company increases its assets.
Short Term Loans from commercial banks: Zylla Limited can also meet its short term
fund needs through acquiring short term loan from commercial bank. Working capital loan can
be taken by Zylla Limited for meeting its working capital requirements. It is a way through
which the company can overcome its seasonal deficiency of cash, cash flow irregularity and
cater its sudden need in business.
Commercial paper: It is commonly used unsecured way to raise funds by the
corporations. Commercial paper is a debt instrument issued by companies to raise short term
finances. It is issued at discounted value.
Long Term Sources