Determining Year-to-Year Percentage Growth
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Answer questions 1 and 2 below based on the financial data attached.
1) Determine the year-to-year percentage annual growth in total net sales.
Based only on your answers to question #1, do you think the company will hit its sales goal of +10% annual revenue growth in 2009? Determine the target revenue figure, and explain why you do or do not feel that the company can hit this target.
2) Next, consider Micro Chip's Consolidated Statement of Operations for the year ended September 25, 2008
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, 2007 through September 25, 2008. Assume a 15% tax rate and restructuring costs of 2% of the new sales figure.
Discuss your results from question number #1. What assumptions have you made? Do any of your assumptions seem unreasonable?
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Solution Summary
Response provides the steps to compute year-to-year percentage annual growth in total net sales, properly formatted in the attached Excel spreadsheet.
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We will also calculate CAGR of 2004-08= (Ending Value/Beginning Value)^(1/number of years)-1
=(8334/11062)^(1/4)-1
-6.83%
http://www.investopedia.com/terms/c/cagr.asp. It is a snapshot of the page as it appeared on 24 Apr 2009 00:15:06 GMT.
Comments:
I feel that the company can achieve the target of 10% inspite of CAGR of last 4 years is in negative -6.83%.
I am hopeful because there has been revival in performance in the last year and the company has grown 35.71% in 07-08.
Hence it can achieve ...
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