Growth Rate
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A) 1-Determine the year-to-year percentage annual growth in total net sales
2-Do you think the company will hit its sales goal of plus 10 percent annual revenue growth in 2005?Determine the target revenue figure,and explain why you do or do not feel that the company can hit this target .
Fiscal years 2004 2003 2002 2001 2000
net sales 8,334 6,141 9,181 11,933 11,062
net income loss per
common share
Basic $5.65 $3.84 $(9.15) $(6.89) $3.50
Diluted $4.64 $3.07 $(9.15) $(6.89) $(3.50)
Cash dividends
declared per common
share $- $- $- $0.12 $0.48
Shares usesd in
computing (loss)
per share
Basic 143,500 135,000 136,000 144,500 121,192
Diluted 174,900 169,000 136,000 144,500 123,047
Cashs,cash
equivalents and
short-term
investments $5,426 $4,600 $3,859 $3,495 $952
Total assets $6,161 $5,289 $5,233 $6,364 $6,231
Long term debt$300 $954 $951 $949 $303
Shareholders
equity $3,104 $1,642 $1,200 $2,058 $2901
B)Consider Micro Chip's Consolidated statement of Operations for the year ended
SEP 25,2004.1-Use the percentage Sales Method and a 20 percent increase insales
to forecast 26,203 through SEP25,2004 .Assume a 15 percent tax rate and restructuringcosts of 2 percent of the new sales figure .2-Discuss your results from question #1.What assumption have you made .Do any of your assumptions seem unreasonable
2-Micro Chip Computer Corporation for the Period September 26,2003 through September 25,2004.
Sales $8,334.00
Cost of Sales $5,458.00
GROSS MARGIN$2,876.00
Operating Expenses:
R&D $525.00
Selling,general and Administrative $691.00
In process R&D -
Restructuring costs -
Total Operating Expenses $1,216.00
Operating income $1,660.00
Total interest and other income net $194.00
Income before provisions for income taxes $1,854.00
Provisions for income taxes $278.10
Net Income $1,575.90
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Solution Summary
The solution explains how to calculate year to year growth rate in sales. To use the growth rate to calculate the target revenue. The use of percentage of sales method to forecast the income statement.
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A1. The year on year calculation are in the attached file. The formula for calculating year on year growth is (year2-year1)/year1.
2. The target revenue figure in 2005 is 10% higher than in 2004. The figure is 8334 X 1.10 = $9,167.4 million. I feel the can hit this target because -
a. The sales in 2004 are up 35.7% over 2003. There is a growth ...
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