Finance
Essay title: Finance
Paige Brown
Unit 2 Individual Project
1)The year- to year percentage annual growth in net sales for Micro Chip Computer Corporation was done in the following manner:
The sales numbers are in millions.
2004- 2003 = 8,334-6,141 = 2,193 = .35710796 = 35.7%
2003 6,141 6,141
2003- 2002 = 6,141-9,181 = 3040 = – .331186145 = – 33.1%
2002 9,181 9,181
2002- 2001 = 9,181- 11,933 = 2752 = -.2206209671 = – 22.06%
2001 11,933 11,933
2001- 2000= 11,933- 11,062 = 871 = .0787380221 = 7.8%
2000 11,062 11,062
2) Do I think the company will hit its sales goal of +10 % annual revenue growth in 2005?
No I do not.
The following is how I came to this conclusion.
10% annual growth of 8,334,000 is times .10= 833,400. $8,33400 + 833,400=
These numbers added together give a target revenue for 2005 of $9,167,400.
To find the average % annual growth I added all of the percentages together while they were still in decimal form and then divided them by four and then converted them into a percentage.
-.11596113/ 4= -.0289902825= -2.9%
The average annual growth between 2000 and 2004 is -2.9%
This means that the growth showed a negative 2.9% decrease in target revenue.
I do not feel the company will hit their target revenue figure. They must increase their annual growth not decrease it.
After calculating a 2.9% decrease to the total net sales for 2004, the projected revenue figure based on past events for 2005 is 8,334,000 * .0289902825= 241,605.0144
8,334,000-241,605.0144= $8,092,394.986
The projected target revenue for 2005 is $8,092,395.
Based on this information I do not think they will make their projected target of $9,167,400 based on the average year to year % annual growth. They will miss it by $1,075,005 million.
Part 2:
Consider Micro Chip’s Consolidated Statement of operations for the year ended September 25, 2004.
Income statement end of Sept 2004
Sales revenue
$8,334.00
Less: Cost of Goods sold $5,458.00
Gross Profits
$2,876.00
Less: Operating expenses
$1,216.00
Operating Profits
$1,660.00
Less: Interest Expense
$ 194.00
Net Profits before taxes
$1,854.00
Less: Taxes (15%)
$278.00
Net Profit after taxes
$1,575.00
Income Statement Pro-Forma Sept 2005
Sales revenue
$10,000.8
Less: Cost of Goods sold(.655) $6,549.5