Zylla Ltd: Business Scenario Report - Funding and Appraisal Techniques

This report provides a comprehensive analysis of Zylla Ltd's business scenario, focusing on the funding required for the acquisition of a new ferry and its working capital needs. It explores both short-term and long-term funding sources, including bank overdrafts, trade credit, leasing, term loans, and the issuance of debentures and equities. The report also evaluates various investment appraisal techniques, such as payback period, internal rate of return (IRR), accounting rate of return, net present value (NPV), profitability index, and discounted payback period. The analysis aims to recommend the most suitable investment appraisal methods for Zylla Ltd to assess the viability and profitability of its expansion plans, providing insights into the financial stability and potential success of the ferry business expansion.

Business Scenario for
Individual Report
(Task-4)

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1) Source of funds for acquisition of ferry and working capital needs.......................................3
2) An evaluation of various investment appraisal techniques and recommendation to the
company......................................................................................................................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Source of funding is a medium from where the company gets some resources to finance
the need of the business. Source of funding includes company's saving and subsidies, credit,
donation etc. that is used to expand the business (Alkaraan, 2017). As Zylla limited operates the
number of ferries and they want to expand the business for that the manager decides to purchase
the new ferry to cater for increased demand. For that company needs the funds for both
acquisition and working capital requirement of the expansion. For that company need both short
terms and long terms funds for the expansion of business.
MAIN BODY
1) Source of funds for acquisition of ferry and working capital needs.
Source of fund is the needed part for the business at the time of expansion thus Zylla
limited collects there funds from both short term and long term sources of finance for acquisition
of the ferry and for the company's working capital needs these are as describes as follows:
Source of Funds for acquisition:
As the Zylla limited wants to expand the ferry business and for that they needs the source
of funds for financing the acquisition (Harris, 2017). It usually arises when company wants to
acquire other company and for that company need both short and long terms source of finance
that is explained as below:
Short term source of funds: These sources of funds are financing the acquisition for a
short period of time less than a year these are as explained below as : Bank overdraft: Zylla limited needs monetary funds for their daily operation which is
arises at between the time gap of collection and payment. Trade credit: The credit that Zylla limited get from their creditors or the suppliers.
 Debt factoring: This is a source by which Zylla limited sell their product at discount.
Long term source of funds: These sources of fund are financing the acquisition for a
long period of time these are as defined as below: Leasing: It helps the Zylla limited at the time of delay in cash, and it is goof financed to
the company. Term loan: These are the loans that Zylla limited get from bank and that secured some of
the company's assets.

 Preferred stock: This is common for both equity stock and debenture, they get the
priority in terms of payments.
Source of Funds for company's working capital need:-
It defines that the Zylla limited wants the funds for working capital as the salaries and
wages must needed to paid, purchasing of raw material, advertising and marketing, overheads are
the most required part unless the amount is received by customer's payment (Ramiah, 2016).
Thus for this company need funds that are as explained below as:
Short term source of funds: These are the source used by Zylla limited for short period
of time are explained below as: Overdraft agreement: It provides the permission to the Zylla limited by bank to borrow a
certain limit of amount from bank without discussing it with bank. It is valuable for the
company if they are able for making the repayment on time.
 Amount receivable by financing: These are the invoice discounting facilities that is
provided by bank as company makes the commercial bill and submit to the bank and
bank makes that payment and bank collects the money on due date. It is beneficial if they
have large amount of credit to handle the operation without the settlement of customer's
bill.
Long term source of funds: These are the source used by Zylla limited for long period
of time are explained below as: Bank loan: Zylla limited can take long terms loans from the bank to accomplish all their
needs of working capital.
 Issue debenture and equities:To invest at large-scale business then they might issue
bonds or debenture to the market but company also focuses on the other different factor
as well according to the financial statement.
2) An evaluation of various investment appraisal techniques and recommendation to the
company.
The investment appraisal techniques are the different techniques that arises the
performance of the new business (Stowell, 2017). Zylla limited use this technique to measure the
stability of the product, the valued decision that they made for the expansion of the business. The
major use of this technique is to measure the value of the ferry expansion by which the cost is

justified. There are several investment appraisal technique that is used by Zylla limited these are
as defined below as: Payback period: It is a time or period when Zylla limited recovers the total cost of the
new business and that shows the profit of the business expansion. Internal rate of return: It is the future cash flow that is discounted by the Zylla limited
as per the requirement at initial stage because company wants funds for the expansion
and that is done at the very early stage of expansion. Accounting rate of return: It is the net profit of accounting which Zylla limited gets as
per the net capital investment means the total profit that company wants on behalf of the
investment. Net present value:It is total discount of Zylla limited at outflows and inflows of the
project. Profitability value: It defines the total amount of investment and profit that Zylla limited
earn as per the dollar.
 Discounted payback period: This is calculated by the Zylla limited on the basis of future
discounted cash flow of the company.
These are some investment appraisal techniques by which the Zylla limited appraised
their performance on the basis of their investment for the new business or the expanded business
(Ware, 2017). It also provides the information about the business that they either gains the profit
or not or also measured the on time success of the Zylla limited.

CONCLUSION
This has been concluded from the above report that Zylla limited needed several short
term and long term source of fund that is needed at the time expansion of their new ferry
business. And also adopt several investment appraisal technique to balanced out the investment
of new ferry expansion to measure the success of the business.

REFERENCES
Books and journals
Alkaraan, F., 2017. Strategic investment appraisal: multidisciplinary perspectives. Advances in
Mergers and Acquisitions, p.67.
Harris, E., 2017. Strategic project risk appraisal and management. Routledge.
Ramiah, V. and et. al., 2016. A behavioural finance approach to working capital management.
The European Journal of Finance. 22(8-9). pp.662-687.
Stowell, D. P., 2017. Investment banks, hedge funds, and private equity. Academic Press.
Ware, A., 2017. Funding democratization. Routledge.