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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)

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.