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Financial Reporting Assignment - Zylla Limited

   

Added on  2020-11-12

8 Pages1621 Words174 Views
TASK 4: BUSINESSSCENARIO FORINDIVIDUAL REPORT

Table of ContentsINTRODUCTION...........................................................................................................................1MAIN BODY...................................................................................................................................1SOURCES OF FINANCE...............................................................................................................1Short Term Sources......................................................................................................................1Long Term Sources......................................................................................................................3INVESTMENT APPRAISAL TECHNIQUES...............................................................................4CONCLUSION................................................................................................................................5REFERENCES................................................................................................................................6

INTRODUCTIONZylla Limited is a ferry based organisation that operates a number of ferries that provideriver crossing services for people, vehicles and goods from one shore to another. Looking at itscurrent financial prospects, Zylla is in consideration of undertaking expansion activities. For thispurpose, the management has made a decision to buy a new ferry to cater for the growingdemand. This Financial Reports aims to take note of all the possible sources of finances availablefor the company to fund both its acquisition as well as working capital requirements for theexpansion (Peyroux, Pütz and Glasze, 2012). In addition to this, valuable recommendations havealso been made in the light of various investment appraisal techniques on the viability ofacquiring ferry and further their expansion plans.MAIN BODYSOURCES OF FINANCEIn order to fund the acquisition of ferry as well as successfully fulfil Zylla's WorkingCapital needs, the following sources can be taken into account:Short Term SourcesOverdraft Agreement:Bank Overdraft Facilities suffice the short term needs of a business with the help of an overdraftagreement between the bank and the account holder (Caglayan and Demir, 2014). This will allowthe organisation to keep check of its working capital which can be further extended once theamount present in their account lapses. Advantages:It is more flexible and adjustable according to the short term needs of thebusiness. As a short-term debt, it is not normally included while determining the business'financial gearing requirements.Disadvantages:High rate of interest is charged which is more than the Banks' Base Rate.One may be required to provide collateral security which increases the risk morethan the returns provided by the bank.Loans from family and friends:1

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