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Determine the year-to-year percentage annual growth in ...

Resolved Question:

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?
Please show all work, including formulae and calculations used to arrive at value.

 

Micro Chip Computer Corporation

Selected Financial Data (in millions except shares and per share amounts)

Fiscal year 2004 2003 2002 2001 2000

Net Sales $ 8,334 $ 6,141 $ 9,181 $ 11,933 $11,062

Net Income (loss) $ 811 $ 519 $(1,245) $ (995) $ 424

Earnings (loss)

per common

share:

Basic $ 5.65 $ 3.84 $ (9.15) $ (6.89) $ 3.50

Diluted $ 4.64 $ 3.07 $ (9.15) $ (6.89) $ 3.45

Cash Dividends

declared per

common share $ -- $ -- $ -- $ 0.12 $ 0.48

Shares used in

computing

earnings (loss)

per share (in

thousands):

Basic 143,500 135,000 136,000 144,500 121,192

Diluted 174,900 169,000 136,000 144,500 123,047

Cash, cash

equivalents, and

short-term

investments $ 5,426 $ 4,600 $ 3,859 $ 3,945 $ 952

Total Assets $ 6,161 $ 5,289 $ 5,233 $ 6,364 $ 6,231

Long-term Debt $ 300 $ 954 $ 951 $ 949 $ 303

Shareholder's

Equity $ 3,104 $ 1,642 $ 1,200 $ 2,058 $ 2,901

Micro Chip Computer Corporation

Consolidated Statements of Operations For the period September 26, 2003 through

September 25, 2004

Sales

$8,334.00

Cost of Sales

$5,458.00

Gross Margin

$2,876.00

Operating expenses:

R & D

$525.00

Selling, General, and Administrative

$691.00

In-process R & D

---------

Restructuring costs

---------

Total Operating Exp

$1,216.00

Operating income

$1,660.00

Total interest and other Income net

$194.00

Income before provision for Income taxes

$1,854.00

Provision for income Taxes (15%)

$278.10

Net income

$1,575.90

 

Submitted: 8 years ago.
Category: Homework
Expert:  mit2008 replied 8 years ago.
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Customer: replied 8 years ago.
In the first question, section 1. I see that it was done in excel, but what formula's would you use to get the answers you have?
Expert:  mit2008 replied 8 years ago.
Here is the Excel table. Please click on the link and then the cells in the last column to see the results. Thanks. Please leave your feedback.
Customer: replied 8 years ago.
Thank you anyway, the excel table does not help me what I am looking for is the actual formula used to calculate the increase or decrease in sales.
Expert:  mit2008 replied 8 years ago.
Ok I will put the formula in writing in a few minutes.
Expert:  mit2008 replied 8 years ago.

To illustrate how the Excel works: If you click on 7.9% in the Excel table, it gives a formula of =B3/B2-1, which means you use the number in cell B3 (11,933) divided by the number in cell B2 (11,062). The resulting number 1.079 - 1 gives 0.079 which is 7.9%.

If you decide not to apply Excel, you can also determine the year-to-year percentage annual growth in total net sales: For example from 2000 to 2001, the percentage is (11933/11062)-1 =0.079 or 7.9%. NOTE: (11933/11062)-1 is equivalent to (11933-11062)/11062 *100%=7.9%. Here 11933-11062 is the growth for year 2001, which when divided by the sales number from year 2000 (11062) times 100% gives the percentage annual growth. Please let me know.

Customer: replied 8 years ago.
Thank you so very much, I think my brain wasn't working right, because a lightbulb just turned on. Thank you again for your help!!