Questions- This assessment will cover following questions:
- Zylla company is engaged in offering ferry services which helps human beings and equipments to get across the river. What can be the best source of finance both for short and long term that can assist the capital needs?
- How can the investment appraisal techniques be used for conducting the successful operation?
- Explain by giving the recommendations of suitability of the opted strategy for investments?
Business acquisition is a process that is used by that organization in order to improve the strength and opportunities of company by combining two similar organization in one. The main objective of this process is related to business expansion and business strengthening process. This report is providing brief of fund accessing and investment appraisal technologies that can be used by Zylla Company for acquiring Ferry Finance company.
Sources of Finance For Fund Acquisition
There are different sources can be used to acquire fund for the acquisition process of Ferry Finance. This sources of fund acquisition can be classified in two categories are long term sources and short term sources (Ebben and Johnson, 2018). This both sources of fund acquisition can be used by Zylla Company. For each type of fund accessing process there are some advantages that can help the organization to ensure enough capital to acquire Ferry Finance.
Funding is an act of providing financial resources, normally in form of money. There are different sources of funding that can be used by the organization to collect capital in order to perform some business activities.
Short Term Source of Finance
Short term financing is a form of financing in which borrowing or lending of money is performed for short period and borrower have to pay back the debt with in short term as per the financial agreement. Normally the short term way of funds acquisition is consider for year or less then a year. There are different short term fund acquisition process are possible for Zylla Company which are-
This are most important single source of short term credit. The trade creditor are considers as business establishments who sells goods to other people or organization on credit. For these process of business do not require money at spot of business (Popli, Ladkani and Gaur, 2017). The transaction of money can be process some days later.
The commercial banks in nation are sources of short term finance for the business operation of other organization. This process of transaction is completed with security and without security. The commercial banks only consider well established organization for fund lending without security.
there are some government and semi government organization that are providing funds to other organization. These organizations are authorised to provide funds to other organizations for short term business concerns. These sources are considered as one of the most efficient sources of short term fund accessing.
Long Term Source of Finance
the long term sources of financing can be consider as capital requirement for a peiriod of more than 5 years. This duration could be more and this time duration is depended on some other factors that are associated with the process if financing. This type of funding process can be used for transaction where funds is required for longer time. There are some process that can be used as long term source are-
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This is one of the most common source of finance for any business organization. This process provide the right to the investor to vote, share profit and claim on the assets of organization. There are various type of equity shares are authorised, issued, paid up or subscribed. Organization sell the share of the company in order to asccess funding form the market place.
Venture funding is a process in which venture funding organizations manage the funds or money of investors. These investors are people who are investing in new organization which are possesses potential of future growth (Hoffman and Bechtold, 2018). This venture provide funds to the organization or start ups who needs funds to run their business for long term. This funding is provided to only those organizations which are capable to generate high revenue later in business.
Term Loan from Financial Institution
This type of funds are provided by the banks and other financial organizations. This type of funding sources are used for the business expansion goals or process. This is one of the best way for Zylla Company to access fund for acquiring Ferry Financing company. This type of financing is also known as project financing.
This how various processes can be used by Zylla Company to access funds from different sources of funding.
Investment Appraisal Techniques
There are different processes can be used by the organization for the invest appraisal process. This process can be used by the organization to attract investors to make an investment in the company that can act as source of funding for organization. Some of the process that can be used by the organization are- Internal rate of return, Net Present Value, accounting rate of return. These are most common processes which are used by the organization to attract more investors.
Internal Rate of Return
internal rate of return is considered as discounting cash flow technique that gives a rate of return that is earned by the project. This is a discounting rate I which total of initial cash outlay and discounted cash inflow are equal to zero.
Net Present Value
Net present value in finance applies to a sequence of cash flow that occur at various times. The current value of the cash flow depends on the interval between current time and cash flow. This also depends on the discount rate (Friar and Mulki, 2019). This is also considered as e value of money.
Accounting rate of Return
This rate is also known as average rate of return or a financial ratio that is used in financial budgeting. Calculated the return that is generated from net income of the proposed capital investment. This is considered as percentage return.
These are some processes that can be used by the Zylla Company to attract the investors to invest in the process of acquiring Ferry Financing. This process can help them to access enough fund to meet their business requirement (Wangerin, 2019). Form these procedures Zylla Company can use Net Present value in order to perform investment appraisal.
This report is concluding the importance of various fund accessing techniques that can be used by the Zella Company to collect fund from the market place for acquiring Ferry Finance company. There are different fund accessing process has been analysed in the report which can be used by company to develop capital for acquisition process. The importance of investment appraisal techniques are also analysed in the study that can provide the capability to access more investors from the target market.
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