Combination And Optimization Of ZTE's Financial Leverage And Operational Leverage

With the strategic planning of China's manufacturing 2025,Internet plus,big data and so on,communication equipment manufacturing industry also ushered in new opportunities for development.5G technology has gradually become the key technology benchmark for future wireless communications.At the same time,economic globalization has closely linked countries,and competition is becoming increasingly fierce while mutual benefit.In order to achieve their long-term development,each enterprise must coordinate its internal and external resources,improve its innovation ability,achieve compliance management,skillfully use the magnification effect of operational and financial leverage,reduce operational risks,and achieve maximum profits and sustainable development.This paper studies the optimal combination of operating leverage and financial leverage by analyzing the operating situation of ZTE in recent ten years.Firstly,the purpose and significance of the research are elaborated,and research on the relationship between operating leverage and financial leverage is carried out by means of quantitative analysis and case analysis combined with the typicality and representativeness of the case.Secondly,by reviewing the development process of ZTE Communications Company,the case is analyzed and introduced.Thirdly,it makes use of the principles of operating leverage,financial leverage and general leverage,and combines the present situation of ZTE.This paper studies the current operating leverage situation of the company from three aspects: research and development cost,depreciation fee and profit.This paper studies the current financial leverage situation of the company from three aspects: pre-interest and tax profit,asset-liability ratio,liquidity ratio and quick-moving ratio.Finally,it tries to reduce operating leverage,reduce operating risk and enhance the adaptability of enterprise financial leverage to operating leverage.In order to achieve a reasonable combination of financial leverage and operational leverage and improve the overall strength of the company,specific countermeasures and suggestions are put forward.