Purchase Solution

Percentage of Sales and Ratios

Not what you're looking for?

Ask Custom Question

For the attached financial statements for Micro Chip Computer Corporation
I need to 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.

Consider Micro Chip's Consolidated Statement of Operations for the year ended September 25, 2004 I need to 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?

Can you please show me all the formulas and calculations used to arrive at financial values. Can you please show me how to do this in Excel, and how your arrived at your answer.

Part 2 -
Using the annual information found in the third attachment. Calculate the following asset activity ratios for the end of 2005:
Average Collection Period
Inventory Turnover
Total Asset Turnover
Please again can you show me, tell me how you arrived at your financial values.

Attachments
Purchase this Solution
Solution Summary

The solution explains how to apply the percentage of sales method and also explains the calculation of Average Collection Period, Inventory Turnover and Total Asset Turnover

Solution Preview

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

The year-to-year percentage growth is found by the formula - (Year 2 sales- Year 1 sales)/Year 1 sales. This as a percentage gives us the percentage annual growth.

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.

First we find the sales with 10% annual growth. The value comes to $9,167.4. The question is will the target be met. For this, we need to look at the growth rates of the past. The growth rate is 25% in 2004 but it was negative in ...

Purchase this Solution
Free BrainMass Quizzes
Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

View More Free Quizzes
Related BrainMass Solutions

  • Four ratios for performing an audit

    The gross margin percentage is defined to be the gross margin as a percentage of sales revenue. It indicates the operational efficiency. The gross margin percentage can be expected to improve as sales increase.

  • Horizontal analysis and other methods

    Many different ratios can be used in ratio analysis. There are several classes of ratios, such as Liquidity ratios and Solvency ratios. Within those classes of ratios are individual ratios.

  • Incorporating ratios into financial planning

    Gross Margin Percentage The gross margin percentage is defined to be the gross margin as a percentage of sales revenue. It indicates the operational efficiency. The gross margin percentage can be expected to improve as sales increase.

  • Financial Statements: Micro Chip Computer Corporation

    This solution calculates the year-to-year percentage of annual growth from net sales, provides the consolidated income statement both current and forecasted, calculates financial ratios and discusses the feasibility of sales goal targets, the results

  • Huffman Trucking Co - Ratio Analysis

    of total assets In the balance sheet, for example, the assets as well as the liabilities and equity are each expressed as a 100% and each item in these categories is expressed as a percentage of the respective totals

  • Solvency of the company(walmart)

    What is the Solvency of the company(walmart) as measured by the below listed ratios? How has it changed over the last five years? How does it compare to its industry or its competitors?

  • Common Size & Vertical Analysis and Limitations of Ratios

    For example, all the items in the income statement may be expressed as a percentage of sales. When this is done, "it is possible to see at a glance how each dollar of sales is distributed among the various costs, expenses, and profits.

  • Financial Statement Analysis & Financial Ratio Types

    Profitability ratios show the overall effectiveness of management regarding the returns generated on sales and investment. Gross Margin Percentage.

  • Accounting and Forecasting Financial Ratios

    Gross Margin Percentage. The gross margin percentage is defined to be the gross margin as a percentage of sales revenue. It indicates the operational efficiency. The gross margin percentage can be expected to improve as sales increase.

  • Financial ratios and a comparison of the ratios

    Response gives guidelines to calculate the financial ratios and to make a comparison of the ratios over the two-year period

View More Related Solutions