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# Percentage of Sales Method

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Https://mycampus.aiu-online.com/courses/FIN410/Assignment_Assets/FIN410_U2_ips.pdf

(Use this link above to answer the following questions)

Click here for selected financial statements for Micro Chip Computer Corporation. 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.

https://mycampus.aiu-online.com/courses/FIN410/Assignment_Assets/FIN410_U2_ips2.pdf

(Use this link to answer these next two questions)

Next, consider Micro Chip's Consolidated Statement of Operations for the year ended September 25, 2004 (click here to download) and answer questions 1 and 2.

1. Use the Percentage Sales Method and a 20% increase in sales to forecast Apples' Consolidated Statement of Operations for the period September 26, 2004 through September 25, 2005. 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?

New instructions:
Part 1 #1- calculate the year-to-year growth in Total Assets
#2 - Do you think the company will hit a target sales growth of 17%?

Part 2 #1 - using the Percentage of Sales Method calculate a 25%
growth in sales to forecast Micro Chip's Consolidated Statement of
Operations. Assume a 25% tax rate and restructuring cost of 2%.
#2 - discuss your results, assumptions and if any of your results are unreasonable.

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#### Solution Preview

Part 1 #1 - The year on year growth in total assets is in the attached file.
#2 - The percentage growth in sales has been calculated. The sales would need to rise to \$9,750 million for a 17% growth. I feel the can hit this target because -
a. The sales in 2004 are up 35.7% over 2003. The sale growth in 2003 and 2002 is negative, but the company seems to have turned the corner since it has posted a very strong growth in 2004 and the growth momentum should continue in 2005 also and a growth rate of 17% (quite less then 35.7%) can be realized.
b. The ...

#### Solution Summary

The solution explains how to calculate the sales growth rate and prepare a proforma income statement using the percentage of sales method

\$2.19