From a general standpoint, Zennith’s Musical Instruments Pty Ltd recorded a positive (impressive) financial performance for the year (Crane, n.d.). One of the reasons behind this outcome is that the company has more channels of debit than those of credit, so it receives money from more transactions than those through it gives away cash. In May, for example, Zennith’s had about 18 channels of debit, while those of credit was only half that tally. In had four customers that had taken goods on credit while two more customers were scheduled to pay up before the end of the year. The debts and scheduled payments add to the number of debit channels through which the company receives money.
Zennith’s Musical Instruments Pty Ltd is in a better financial position because it runs a profitable. In June, for example, it made $125,502.30. In addition to that, it expected to receive $168,953.40 from the “Schedule of Accounts Payable” which would add to the cash at the company’s disposal. All the four customers (Bach Cellos, Mozart Guitars, Brahms Pianos, and Beethoven Trumpets) that took Zennith’s goods on credit in May were also expected to clear their bills before the year ends. If they hold their end of the bargain, then the company’s cash would increase by about $261,954.
It also worth noting that Zennith’s Musical Instruments Pty Ltd has many channels of cash flow, which enables it to receive enough cash that it can turn into capital for its operations (Carton & Hofer, 2010). These factors, coupled with the fact that the company enjoys large economies of scale by selling goods wholesale (large quantities); put the company in a better financial position. It has a long-term loan which means that it does not have to folk out large sums of it cash package in payments.
One of the areas of concern in Zenith’s financial performance is that it takes larger sums of money in credit than what it has in credit. For example, its Mortgage Loan and Share Capital are $606,942 and $1,134,000 in credit, respectively. Both values are more than the highest amount the company has in debit which is Cash at Bank worth $570,017.7. Another area of concern in the company’s financials is the amount of money that flows in and out of it. In the first week of June, for example, it only collected a net amount of $21,205.80 while it delivered $75,121.20 worth of goods.
In 2019, Zennith’s Musical Instruments Pty Ltd recorded a positive (impressive) financial performance and ended the year on a strong financial position. However, some areas of its financial operations need fixing. For example, it last paid the staff in June 15, leaving it with a hefty sum of money in debts of staff wages. By the end of the year, it owed the staff about $440,748 in wages. Not only do such debts imbalances the company’s financial management, but also steers some issues that could upset the bottom line of its financial operations. I would also advise Zennith’s Musical Instruments Pty Ltd to consider making payments in time. For example, the estimated tax payable for the year ended June 30, 2019 was $86,400, and the company had a two-month window to clear the tax. The company should make the payment sooner rather than wait for the last minute.
Carton, R. B., & Hofer, C. W. (2010). Organizational Financial Performance: Identifying and
Testing Multiple Dimensions. Academy of Entrepreneurship Journal , 1-22.
Crane, L. M. (n.d.). Measuring Financial Performance: A Critical Key to Managing Risk.
Retrieved May 1, 2020, from MSU: https://msu.edu/user/steind/financial_measures.pdf
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