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# Micro Chip Computer Corporation

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For selected financial statements for Micro Chip Computer Corporation click here . 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 (click here to download) 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, 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?

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#### Solution Preview

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 ...

#### Solution Summary

The solution explains how to calculate the growth rate and preparation of income statement using the percentage of sales method.

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