UTC Company AnalysisImproving Earnings Outlook Over the period 2002-2006, UTC posted positive earnings. Over the last 5 years, UTC's revenue, net profit and working capital have increased. To help drive positive earnings each year, UTC uses a process across all of its companies called ACE (Achieving Competitive Excellence). ACE has been implemented at UTC for seven years and is truly improving the appearance, customer service and sales by employees who implant the ACE instruments. Some of the most important ACE tools implemented to help UTC receive such positive earnings every year are:- 6S (Safety, Sort, Straighten, Shine, Standardize and Sustain) – This tool helps employees to improve workplace organization, efficiency, safety and employee morale. - Benchmarking: a process of measuring and comparing products, practices and services against industry leaders. - DIVE (Define, Investigate, Verify and Assure) - A tool for the customer service problem-solving process. - Kaizen - Improves the organization and flow of processes thanks to employees who disassemble a product, study it and then reassemble it better than before. - MFA (Market Feedback Analysis) - Using customer feedback to identify and improve a problem. - Error checking: Ask employees to brainstorm and implement techniques and devices that prevent defects from occurring. - QCPC (Quality Clinic Process Charting) - Used to continuously analyze a process for quality improvement by monitoring response times to resolve inefficiencies or delays in a process. - Standard work - Defined sequence of activities and specific working methods. Within ACE, you have ACE gold, silver, bronze and qualifying. Qualifying means that your employee group includes ACE and are starting to implement tools to improve customer service, returns and sales. ACE gold (the highest and most prestigious award you can receive) means that your group of employees fully understands ACE tools and implements them in their daily work to achieve low turnaround times, high customer service and high sales. Currently only a handful of sites are ACE Gold within UTC. UTC's goal is to make every site ACE Gold in the years to come. With every UTC site targeting ACE Gold, earnings are set to increase every year. Below is a chart showing UTC's earnings outlook from 2002 to 2011. This shows that UTC's earnings outlook will be positive for the next 5 years to come. Cost Structure Looking at the income statement, 82% of UTC's revenue consists of variable costs. 54% of their revenue comes from the cost of products sold, 18% from the cost of service sold.