Zylla Limited: Evaluation of Finance Sources & Investment Appraisal

This report provides a comprehensive analysis of Zylla Limited's financial strategies, focusing on short-term and long-term sources of finance to meet capital requirements. It explores various investment appraisal techniques, including Net Present Value (NPV), Average Rate of Return, and Payback Period, to assess the viability of potential acquisitions. The analysis reveals a favorable NPV, indicating strong cash inflow, and a reasonable payback period. Recommendations are made to improve the average rate of return by motivating employees. The report concludes that Zylla Limited is profitable and can further expand its business through strategic financial decisions, such as issuing shares, while highlighting the importance of efficient resource utilization and strategic financial planning for sustained growth.

Task 4

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK...............................................................................................................................................3
1. Short term and Long term sources of finance of Zylla limited to meet the capital
requirements:...............................................................................................................................3
2. Explanation of various investment appraisal techniques and recommending the viability of
the acquisition ............................................................................................................................4
3. Analysis and Recommendation-.............................................................................................5
CONCLUSION ...............................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Business finance refers to the arrangement of finance in the organisation so that the
business owner can run their business operation smoothly and achieve the goals of the
organisation without any difficulty. This report contain all the information related to sources of
finance of the Zylla company (Aldridge and Avellaneda, 2021). Zylla Company provide ferries
services to the people for crossing the river comfortably. This company is earning good profit
from their operations and wants to exapnd their business so that they can earn larger for a long
period of time. All the financial informations of the Zylla limited will be included in this report.
TASK
1. Short term and Long term sources of finance of Zylla limited to meet the capital requirements:
Short term source of finance of Zylla limited-
Short term source of finance are of usually 1 year to 5 years. Some very basic shor
finance are-
Bank Over Draft- The very first short term source of finance of Zylla limited is bank
overdraft. It is a kind of facility provided by the bank to their customer who are engaged in
business activities. Zylla limited company allow to take the funds as a loan from the bank if they
need to complete the transaction with out any interruption. The loan or fund which is provided
by bank in this overdraft facility is limited up to a certain amount. The amount limit is decided
according to the size of account of the customer. The bank overdraft is considered as a reliable
sources of finance because it helps them to make the payment to their dealers as soon as possible.
Bank loans- The next short sources term finance of the company is bank loan. The Zylla
limited company can take loans from the bank so that they can purchase new ferries and expand
their business. In bank over draft facility the company create funds in the organisation for paying
their payments to their creditors but the company take loan through they can expand their
business to the next level.
Long term sources of finance-
The period for long term sources of finance is usually 5 years to 20 years. Some of the
long term sources of finance of Zylla limited are as follows-
Equity Shares- The Zylla limited can raise their funds by issuing their shares in the
market due to which they can run their operations smoothly (Ayub, 2018). The organisation can

provide dividend to their shareholders so that they can attract investors in their company. The
equty shares of te company are also known as ordinary shares. By the help of this sources the
company can expand their operations to that level on which they want to take. In case of equity
share the Zylla limited is not liable to pay back the money to the shareholder so that why it is
also considered as most reliable source of finance.
Debentures- Debentures is kind of bond provided by the company to the public so that
they can raise the funds from the organisation (Elkhal, 2019). The amount which the company
get from the public is mostly use for expanding the business activities. The amount which
company raise from the public as a debentures have to pay back by the company to the public
after the retirement of the debentures.
2. Explanation of various investment appraisal techniques and recommending the viability of the
acquisition
Net present value- The net present value is considered as a deviation between between
the net cash inflow of the organisation and net cash outflow of the organisation. It helps the
organisation preparing of capital budgeting and planning to invest so that the organisation can
the analyse profitability of the organisation (Gurbanov and Suleymanli, 2022).

Average Rate of Return- It is a another method of investment appraisal techniques which help
organisation to measure the expected return of a investment (Han, Hus, and Li, 2019). It is
depended on the various factors such as existing prices and the complexity of the business. It can
be calculated by subtracting the amount of revenue lost from cancellations to the revenue
generated by yearly subscriptions and upgrades.
Pay Back Period- It refers to the total number of years required to recover the amount which is
invested by the investor in a particular investment. It can understand by the help of example
which is that if any manufacturer invest their money in the machine to produce goods and
services then the pay back period of that money can be analysed by the total working days of that
machine in the company.
3. Analysis and Recommendation-
From the above calculation it can be observed that the Zylla limited's net present value is very
good enough for the organisation because the NPV is £1,89,363.415 which means that the
company's cash inflow is more than the outflow (Hasnie, Collazzo and Hassan, 2022). From the

payback period it can understandable that they company have recover their amount from the
investment in just 2.4years and the life cycle of the machine was 5 years which means that the
company have use their machines effectively and efficiently. From the average rate of return it
can be concluded that the average rate of return is 1.25% it should be around 10%. The Zylla
limited have to motivate their employees so that they can do their best in the organisation (Hines,
2020).
CONCLUSION
From the above report it can be observed the Zylla limited company have earning good profit
from their operations. The Zylla limited company have to bought new ferries so that they
increase their profitability in the organisation. The above report also include some financial
information from which it can understandable that the organisation have earn large money from a
small investment. The Zylla limited company can raise their finance from the various sources
which are already stated above. Through these sources the company can expand their business to
the global level. If they want large amount of money then the company issue their share in the
market on which they don't have pay the interest amount amount.

REFERENCES
Books and Journals
Aldridge, I. and Avellaneda, M., 2021. Big data science in finance. John Wiley & Sons.
Ayub, M., 2018. Islamic finance crossing the 40-years milestone-the way forward. Intellectual
Discourse. 26.
Elkhal, K., 2019. Business uncertainty and financial leverage: should the firm double up on
risk?. Managerial Finance.
Gurbanov, S. and Suleymanli, F., 2022. Analytical Assessment of Green Digital Finance
Progress in the Republic of Georgia. In Green Digital Finance and Sustainable
Development Goals. (pp. 205-222). Springer, Singapore.
Han, X., Hus, S. and Li, J., 2019. The impact of enterprises’ shadow banking activities on
business performance: a test based on mediator effect of investment scale and
investment efficiency. Emerging Markets Finance and Trade. 55(14), pp.3258-3274.
Hasnie, S.S.A., Collazzo, P. and Hassan, M.K., 2022. Momentum strategies of Conventional and
Islamic finance.
Hines, B., 2020. Digital finance: Security tokens and unlocking the real potential of blockchain.
John Wiley & Sons.