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Percentage of Sales

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For selected financial statements for Micro Chip Computer Corporation see attach file MicroChip.pdf. Answer questions 1 and 2 below based on the financial data.

1. Determine the year-to-year percentage annual growth in total net sales.

2. Based only on your answers to question #1, do you think the company will hit its sales goal of +10% 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.

Next, consider Micro Chip's Consolidated Statement of Operations for the year ended September 25, 2004 on attach file MicroChip2.pdf and answer questions 1 and 2.

1. Use the Percentage Sales Method and a 20% increase in sales to forecast Micro Chip's Consolidated Statement of Operations for the period September 26, 2003 through September 25, 2004. Assume a 15% tax rate and restructuring costs of 2% of the new sales figure.

2. Discuss your results from question number #1. What assumptions have you made? Do any of your assumptions seem unreasonable?
Show work, including formulae and calculations used to arrive at financial values.

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The solution explains how to use the percentage of sales method to forecast for Microchip Corporation

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1. Determine the year-to-year percentage annual growth in total net sales.

The year-to-year percentage is calculated by the following formula (Year2-Year1)/Year1 and the figure as a percentage. The calculation are in the attached file.

2. Based only on your answers to question #1, do you think the company will hit its sales goal of +10% 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.

The target revenue figure comes to 9,167.4. In order to answer this, we need to look at the growth rates in the previous years. In 2002 ...

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