Sony Corp. Final Report Research Paper Example | Topics and Well Written Essays - 1750 words

Sony Corp. Final Report - Research Paper ExampleThe management believe that the strategy executing would further reduce costs by more than ?300 one million million. Nevertheless, Sony should pay particular attention in improving its long term solvency position given that its liquidity ratio is currently below the labor average and it poses a risk that it might not be able to meet its current obligations in an event of emergency even though inventories are not liquidated. (Annual Report, 2009-2010) The debt-to-worth ratio expresses the extent to which the business is relying on debt financing as opposed to shareholders funds (Albrecht, 2004). The increase in debt-to-worth ratio from 2.62 in 2008 to 3.05 and 3.34 in 2009 and 2010 independently display that Sony is gradually increasing its reliance on debt financing mainly to fund the innovation need for the business growth. The Groups financial risk position is increased as reflected by the issue forth debt position of the Group. The total debt in 2008 as at balance sheet amounted to ?1,084 million, ?1,111 million in 2009 and ?1,209 million in 2010. (Annual Report, 2009-2010) The debt-to-worth ratios for 2008, 2009 and 2010 which are higher than the industry average further lay emphasis that Sony is currently at a highly leverage position as compared to its competitors. It would pose a threat to its financial safety device and flexibility to borrow in the future if the trends continue. Moreover, there might be debt covenants which the Group is obliged to postdate and it is critical that the Group monitors them tightly as non-compliance cause breaches in contract and immediate repayment is required. glaring Profit Margin shows a hang from 2008 (23.1%) to 2009 (19.7%) mainly caused by the challenging economic environment ready by the global financial crisis and the negative impact driven by the appreciation of the yen against U.S dollar sign and Euro. There is an overall decline of sales in the electron ic, Game, Pictures and Financial Services businesses. gross sales in the Electronic business declined 17% from ?6,613 billion to ?5,488 billion as there is a low demand for products such as the Handy cam video cameras, Cyber-shot compact digital cameras and VAIO PCs. Additionally, Sony has exited its business in LCD rear-projection televisions and CRT televisions during the year. The falling off in sales in the Game business from ?1,284 billion to ?1,053 billion is mainly contributed by the decrease in revenue in its PS2 business while motion pictures revenue were down by 16.4% from ?858 billion to ?718 billion primarily driven by lower home entertainment demand and fewer films macrocosm sold to the home entertainment market. Financial Services revenue dropped 7.4% from ?581 billion to ?538 billion due to wage deterioration at Sony Life caused by the net valuation loss of convertible bonds and increase in impairment loss on equity securities. However, in 2010, the gross profit margin has improved well recording a margin of 22.9% subsequent to restructuring measures and cost reduction activities implemented. The restructuring consists of three horizontal platforms the Global Sales and Marketing political platform, the Manufacturing, Logistics, Procurement and Customer Service Platform and the Research and Development and Common Software Platform aim to achieve cost efficiencies,