Financial Management Report for Zylla Company

A REPORT

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Short term and long term sources of finance...............................................................................3
Evaluation of investment appraisal techniques............................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................1

INTRODUCTION
The present report is based on financial management with regard to the given business
scenario of Zylla company. Zylla is involved in the business of running ferries across a river
where river crossing services are provided for goods, people and vehicles. The financial position
and performance of the business is quite good along with having better prospects for the future in
terms of expansion. Accordingly, management is considering a buy for a new ferry to meet the
increasing demand for their ferry services. Therefore, in this report, various aspects of financial
management will be taken into account that is, sources of long term and short terms finance for
buying and providing for working capital with respect to a newly bought ferry. Furthermore,
various investment appraisal techniques will be evaluated and one of this technique would be
applied to appraise the proposal of investment in new ferry.
MAIN BODY
Short term and long term sources of finance
Short term financing could be possible through sources of short term finance which
involves extension of loan or credit facility to a business for a period not more than one year
(Atmadja and et.al., 2021). This type of financing is demanded for financing working capital
needs which involves current liabilities management, payment for raw materials, salaries &
wages to labourers, etc. Accordingly, with the help of short term sources of finance, smooth
functioning of day to day activities of the business is possible by ensuring sufficient liquidity.
Sources of short term finance are as follows:
Trade credit: Here funding is made available through agreeing with suppliers for not making
immediate payments for the raw materials or any other supplies. With this, business operations
are continued without interruption on account of arranging for finance in order to make payments
to suppliers. Also, there is no requirement of paying interest on the trade credit provided.
Bank finance: It involves both bank overdraft of short term loan from bank. Bank overdraft
allows for withdrawing over and above what is available in the business bank account and
interest is charged on the amount overdrawn (Ochi, Idiege and Bassey, 2021). On the other hand,
bank loan facilitates businesses to borrow at a particular rate of interest for short duration against
the security. Here repayment could be both in instalment and lump sum amount depending upon
the terms of loan contract.