Financial Report: Zylla Ltd. - Ferry Acquisition and Funding Options

This report, prepared for the board of directors of Zylla Limited, a company providing river crossing services via ferries, assesses the financial viability of acquiring a new ferry to meet growing demand. It explores both short-term and long-term funding sources, including bank loans, additional partners, leasing, and retained earnings, to cover the cost of the ferry and working capital. The report details various risk assessment techniques, such as the payback period, accounting rate of return, net present value (NPV), and internal rate of return (IRR). The analysis, using the NPV method, demonstrates the financial benefits of the proposed investment. The conclusion recommends the acquisition of the new ferry based on the positive financial projections, highlighting the importance of strategic financial planning for business expansion.

REPROT TO BOARD OF DIRECTORS

Contents
INTRODUCTION.......................................................................................................................................3
MAIN BODY..............................................................................................................................................3
CONCLUSION...........................................................................................................................................6
REFERENCES............................................................................................................................................7

INTRODUCTION
This is essential for businesses to control their capital efficiently and to choose
investments (Badeeb, Lean and Smyth, 2016). The project report focuses on Zylla limited which
provides the river crossing services by ferry to fulfill the financial requirements. This is because
the management of these operations is an important feature. In the present period, the
organization aims to grow the business by purchasing new ferries. In order to make effective
investment choices, the analysis often includes the implementation of fund valuation approaches.
As well as report is aimed to provide information to board of director of above plc.
MAIN BODY
1. Shorter and lengthy term of source of funds in order to acquire new ferry and for satisfying
requirement of working capital.
In the present business environment, a range of financial channels are accessible to
corporations. It depends on which businesses get capital from which source. Eventually, the
following is the list of two types of funding sources:
Short term source of finance- This may also be interpreted as a type of financial source from
which corporations are able to receive funds for a lower cost provision in less than one year. For
example, they can satisfy the Zylla Limited Corporation's working capital requirement from this
source. There are different outlets, for example:
 Bank loan or overdraft- The concept bank loan can be defined as cash payments, usually
on collateral, by a bank for borrowers' expense over time. Since overdraft is a service of
some kind where people can also borrow cash, in their banking accounts, they do not
have enough funds (Macfarlane and Mazzucato, 2018). This is a key source of pace to
reach working capital requirements.
 Additional partners- This investment source can be supported by the organization with
additional partners and a total of funds. It may be helpful when achieving short-term
requirements. They will fulfill their working capital needs through the acquisition of new
investors in the Zylla limited partnership.

 Accounts receivable financing- This gives company short-term funding for the disposal
of its bonds and the immediate need for funds. The company can raise funds using this
method in order to fulfill the demands of working capital.
Long term source of finance- It can be used as a type of funding source from which businesses
will obtain more than one year of funds to offset longer expenses. They should comply, as in
Zylla limited company, with the requirement to buy new ferry. Different sources exist, including:
 Leasing- It can be described as a contract between the lesser (owner), and the lender
(individual who gets property), for a set amount of time to pay rents to lease related
assets. In the aspect of above company, they can adopt this source of finance in order to
acquire new ferries. They can get new ferries on the basis of lease agreement.
 Retained earnings- This is a sort of financial outlet that can be given inside the
organization at no cost. This may be done by businesses charging their shareholders
royalties on revenues (Thaker, 2018). As in the above company, they may meet the need
to purchase a new ferry from this fund source.
 Term loan from financial institutions- It is a vital source of finance for enterprises who
may seek financial assistance from foreign financial institutions such as the government
(Jiang, Jiang and Kim, 2017). Unlike the above group, they may purchase a new ferry by
getting bank loans.
2. An overview of different risk assessment techniques and indicating the feasibility of
purchasing and running new ferry using one acceptable investment assessment technique.
In current era, there are diverse methods to examining particular investing strategies. Many of
the methods are as follows:
 Payback period- The measurement of the duration during the investment cost stage can
be defined as a technique. The following formula calculates the payback period:
When cash flows are the same:
Payback period = Initial investment / cash flow
When there is unequal cash flow-Payback period = Years before recover + UN-recovered
cost in beginning of year + Cash flow in the year.

 Accounting rate of return- The method of calculating the estimated rate at which
investment income is produced is described by businesses. Return Rate Formula
Calculation formula is as follows:
ARR= (Average annual profit after depreciation / Investment) x 100
 Net present value method- This can be defined as a method which is related to
calculating current value of a project for a particular time period (Cheng, Hua and Tan,
2019). This is computed by below mentioned formula which is as follows:
Calculate NPV:
NPV = Discounted cash flow – Initial investment
 Internal rate of return- In order to measure the project performance in this approach, the
internal returns rate is calculated by help of below mentioned formula:
Analysis of efficiency of ferry:
Initial investment = 150000
YEAR Discount Factor Cash Flow Computation
1 0.971 55230 53628.33
2 0.943 70045 66052.43
3 0.915 88375 80863.12
4 0.888 79870 70924.56
5 0.863 57555 49669.96

Decommissioned 0.863 45000 38835
TOTAL 359973,4
NPV 359973.4-150000=209973.4
NPV=PRESENT VALUE OF CASH INFLOWS-PRESENT VALUE OF CACH OUTFLOWS
Analysis- It can be founded that the above business has an advantage for buying a new boat
according to this net present value. And the present value of their project is optimistic.
CONCLUSION
At the end of the project report, the financing is an essential factor for businesses and
organizations to raise funds from a range of outlets for these purposes. The report concludes on
quick and long-term financing choices as well as various capital measurement strategies like
internal returns, net present value, etc. In the end, new ferry must be purchased by above
company because it is beneficial for them.

REFERENCES
Books and journal:
Badeeb, R.A., Lean, H.H. and Smyth, R., 2016. Oil curse and finance–growth nexus in Malaysia:
The role of investment. Energy Economics, 57, pp.154-165.
Macfarlane, L. and Mazzucato, M., 2018. State investment banks and patient finance: An
international comparison. UCL Institute for Innovation and Public Purpose Working
Paper 2018, 1.
Thaker, M.A.B.M.T., 2018. A qualitative inquiry into cash waqf model as a source of financing
for micro enterprises. ISRA International Journal of Islamic Finance.
Cheng, C., Hua, Y. and Tan, D., 2019. Spatial dynamics and determinants of sustainable finance:
Evidence from venture capital investment in China. Journal of Cleaner Production, 232,
pp.1148-1157.
Jiang, F., Jiang, Z. and Kim, K.A., 2017. Capital markets, financial institutions, and corporate
finance in China. Journal of Corporate Finance.