It is no doubt that if the company wants to survive and has big market for a long time, the company must have great profits to maintain the operation of the company. Then how to get amount of profits from the market has become the main target for the management. Therefore, the company needs to analysis his company operation often, from which the management can find the problems quickly and then resolve it. In this essay, the reporter takes Netflix as an example for us to learn the operation cost and the profits of the company.

As the financial table must be given to the shareholder, thus it must present the truth financial information of the company. Netflix has achieved this success in operation its business. In this operation, the market and the consumers are the two important factors to bring the profits to the company’s income. The consumers are loyal to the product and sensitive to the price of the product. Therefore, the firm needs to deal with the relationship between the consumers and the company. In addition, the management of Netflix also needs to deal with the relationship between the cost and profits of the company. Now, we will see the profit of Netflix in recently years. From this part, we can realize that the strong position of the Netflix in this market. The company has expanded its market in recently years, so the profits have grew up speedy. More and more consumers are loyal to its product and more likely to buy their product. In the following part, the author will analysis the financial report of Netflix to get a clearly idea of the operation of the company.

As we all know, Netflix has higher cash balance growth rates in these years. From the firm’s 2010 annual report, we can see that the revenue has grown up from $1,364,661 in 2008 to $2,162,625 in 2010, which make so much profit for the company to expand its business and attract a number of consumers. The main factor of the revenue is the subscription which brings a mount profit in the revenues for Netflix. The gross profit in 2010 go up not as fast as the revenues in 2010.The increase is attributed to the increased consumer awareness of the compelling value of streaming video and DVD-by-mail for one low price as well as the other benefits Netflix offers. The main source of the company has been cash from operations. We can see from the financial table, the operation income in 2010 is $286,641, which is twice larger than the operation income in 2008. However, the cost of the company is also a little higher for example, the operation cost in 2008 is $89,873 and $163,329 in 2010, from which we can realize that the cost is growing more slowly than operation cost. Among the operation cost, the main cost is the technology and development cost, so if we want to cut the operation cost, we need to cut down the technology and development cost at first, by which the profits can also improve a lot. As the paper mentioned above, if the company want to have more profits, it must cut down the cost of the operation. Only by this can the company have more finance to expand its business. How to cut down the technology and development cost without destroy the quality of the products? This should be the main problem for the management to resolve to cut down the operation cost. In order to expand the business and market in this industry, the company needs to have sustained a number of consumers for their product.