Research On The Causes Of TZ Company’s Profits Declining In2010

2010was the first year of the pilot phase of three networks convergence, and also thefirst year of “the Twelfth Five-Year” Plan. Various generation of information technology suchas cloud computing, networking, mobile Internet is promoting ordinary families into a life ofwisdom step by step. In this year, a comprehensive start of industrial integration is carryingout.Under the background of the integration of information technology and industry, digitalset-top boxes,as digital home’sloading terminal, are driven to escalate their industrial structureand accelerate their industrial innovation. TZ company as Asia’s largest STB manufacturer, isalways flavored by investmentcommunity. In2010, the operating income of TZ achieved￥2,300,952,950, representing an increase of15.64%compared with2009, also in2010, thecompany’s net profit fell to the lowest of￥131,514,487.By comparing the trends of itsrevenue and net profit, we found an abnormal ""shape, that is, the highest Operatingincome is Corresponding to the lowest net profit. whatexactly are the causes that lead to thisresult?In this paper, the quality of profit structure and trend analysis method,combining withDuPont analysisapproach and operating margin analysis method are used to analysis TZ’sprofit declining. We find that TZ company’s profitability decline was attributable to decreasein operating margin rate, while the operating margin decline was mainly due to rapid growthof operating costs, selling expenses and administrative expenses.Further analysis revealed thatthe rise in costs and expenses is aroused by TZ’s strategic target of company restructuring tomatch into3G terminal area, which requires a substantial increase in technical personnel todevelop new products and sales staff to expand marketing channels. Upfront inputs of moneyare necessary to adapt to strategic transformation, but the proportion of rising is unreasonableafter thorough analysis, meanwhile, the descending inventory turnover and accountsreceivable turnover caused by its strategic transformationis seriously affecting the company’soperation capability.To solve the above problem, we recommendthat:(1) TZ company should downsize a little, control laborcosts and improve the efficiency of per capita output.(2)enhance close cooperation with customersthrough an integrated corporate resources, to solve problems of high accounts receivable;improve thelogistics turnaround service and improve the company’s inventory turnover rate by optimizing supplychain management.(3) upgrade and optimize the performance of the original productanddevelop newproducts with market space bycentralizing all the resources. We hope to help TZ company to elevatestatus quo, and improve future profitability, as to achieve competitive advantage...