Micro Chip Computer Corporation

Micro Chip Computer Corporation

Part 1; Question 1:

Using the financial statement that was selected, determine the year to year percentage annual growth in total sales.

Part 1; Answer 1:

Micro Chip Computer Corporation

Fiscal Year 2000 2001 2002 2003 2004

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

Year to Year Growth* − 8% -23% -33.00% 36%

* figured by taking one year sales minus the previous year sales divided by the same previous year sales.

Part 1; Question 2:

Using the year to year growth I figured in the answer to question 1, do you think that the company will hit its sales goal of +10% annual revenue growth for 2005? Determine the target revenue figure, and explain why you do or do not feel that the company can hit this target?

Part 1; Answer 2:

To figure the target revenue for 2005 we take 2004 net sales and multiply that by 1.10. $8,334M * 1.10 = $9,167M.

I can conclude that in 2005 the company will more than likely meet its sales goal of + 10%. Looking at the sales growth for each year I can see how this company has done in past and present years One reason why I do think they can meet their goal is because the sales did grow from 200 to 2001 by 8%. The next couple of years the company had a sharp decrease which was more than likely a result of economic troubles. In year 2004 sales increased again exceeding the expectations which show great promise that the annual revenue growth for 2006 can be attained.

Part 2; Question 1:

Based on the consolidated statement of operations for the year ending September 25, 2004, use the percentage sales method plus an increase of 20% in sales to forecast the consolidated statement of operations for the period September 26, 2004 through September 25, 2005, with the assumption of a 15% tax rate and restructuring costs of 2% of the new sales figure.

Part 2; Answer 1:

Micro Chip Computer Corporation Consolidated Statement

Consolidated Statements of Operations For the period September 26, 2004 through

September 25, 2005.

Sales $10,000.80M $8.334M + 20% = $10,000.80M

Cost of Sales $6,549.60M $5,458M + 20% = $6,549.60M

Gross Margin $3,451.20M $10,000.80M - $6.549.60M = $3,451.20M

Operating expenses:

R & D $630M $525M + 20% = $630M

Selling, General, and Administrative $829.20M $691M + 20% = $829.20M

In-process R & D

Restructuring costs $200.02M $10,000.80M * 2% = $200.02M

Total Operating Exp $1,659.22M $630M + $829.2M + $200.02M = $1,659.22M = $1,659.22M

Operating income $1,791.98M $3,451.20M - $1,659.22M = $1.791.98M

Total interest and other Income net $232.80M $194M + 20% = $232.80M

Income before provision for Income taxes $2,024.78M $1,791.98M + $232.80M = $2,0274.28M

Provision for income