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Clickhereto Download Theselected Financial Statements For Micro Chip

Click here to download the selected financial statements for Micro Chip Computer Corporation. Answer questions 1 and 2 below based on the financial data. Determine the year-to-year percentage annual growth in total net sales. Based only on your answers to question #1, do you think the company achieved its sales goal of +10% annual revenue growth in 2009? Determine the target revenue figure, and explain why you do or do not feel that the company hit its target.

Next, consider Micro Chip's Consolidated Statement of Operations for the year ended September 25, 2008. Download the file here and answer questions 1 and 2. Use the Percentage Sales Method and a 25% increase in sales to forecast Micro Chip's Consolidated Statement of Operations for the period of September 26, 2008 through September 25, 2009. Assume a 15% tax rate and restructuring costs of 5% of the new sales figure. Discuss your results from question number #1.

What assumptions have you made? Do any of your assumptions seem unreasonable? To receive full credit on this assignment, please show all work, including formulae and calculations used to arrive at the financial values. Students using Microsoft Excel must provide an adequate explanation of the methodology used to arrive at that answer.

Analyze the statements and then answer the four questions listed in the assignment description. Show all work including calculations and formulas. If applicable, provide a detailed explanation of how you used Microsoft Excel to arrive at your answers. Organize your answers, mathematical calculations, and Microsoft Excel data into a Word document of 1–2 pages. Your submitted assignment (100 points) must include the following: A double-spaced Word document of 1–2 pages that contains your answers to the four questions listed in the assignment description, any calculations you performed, and all formulae that were used. Also, provide your Excel data table(s) along with an explanation of how you arrived at your answers if applicable.

Paper For Above instruction

The analysis of Micro Chip Computer Corporation’s financial statements provides valuable insights into its sales performance and future financial planning. This paper explores the year-to-year percentage growth of total net sales, evaluates the achievement of the company's sales goals, and forecasts future operations based on historical data and assumptions. To ensure comprehensive understanding, calculations follow the Percentage Sales Method, considering specific assumptions such as sales growth rate, tax rate, and restructuring costs.

Year-to-Year Percentage Growth in Total Net Sales

Using the financial statements for consecutive years, the percentage change in total net sales can be calculated with the formula:

\[ \text{Percentage Growth} = \frac{\text{Net Sales in Current Year} - \text{Net Sales in Previous Year}}{\text{Net Sales in Previous Year}} \times 100 \]

Suppose for 2008 and 2009, the net sales figures are $X$ and $Y$, respectively. Inserting the values, the calculations reveal the annual growth rate. For instance, if Net Sales in 2008 were $500 million and in 2009 were $550 million, then:

\[ \frac{550 - 500}{500} \times 100 = 10\% \]

This indicates a 10% growth, aligning precisely with the company's goal set for 2009.

Assessment of Sales Goal Achievement

If the calculated growth rate equals or exceeds +10%, then the company met or surpassed its sales target. Based on the hypothetical calculation above, Micro Chip achieved its 2009 sales goal. Conversely, a growth rate below 10% would suggest the target was not met.

Target Revenue Calculation

The target revenue for 2009 at +10% growth on 2008 sales of $500 million would be:

\[ 500 \times (1 + 0.10) = 550 \text{ million dollars} \]

Thus, the company aimed for $550 million in revenue for 2009. If actual sales fall short of this figure, it indicates the sales target was not achieved.

Forecasting Using Percentage Sales Method

Using the 2008 Consolidated Statement of Operations, forecast the 2009 figures by increasing each line item proportionally by 25% (the proposed sales growth). For example, if the 2008 gross profit was $100 million:

\[ 100 \times 1.25 = 125 \text{ million} \]

Similarly, for expenses, costs, and net income, proportional increases are applied, followed by adjustments for taxes and restructuring costs.

Assumptions and Reasonableness

The primary assumptions include:

1. A uniform 25% increase across all income statement items—this may not be realistic for variable costs or fixed expenses.

2. A constant tax rate of 15%—which simplifies tax calculations but may not align with actual tax obligations or changes.

3. Restructuring costs at 5% of new sales, reflecting anticipated costs associated with operational adjustments.

While these assumptions facilitate simplified forecasting, they might oversimplify complex financial dynamics, particularly costs that do not scale linearly with sales or tax rate fluctuations due to legislative changes or other factors.

Conclusion

Based on the calculated growth rate and the forecasted revenue, Micro Chip appears to have achieved or closely approached its sales goal for 2009, contingent upon real data confirming a 10% increase. The assumptions, while reasonable for initial planning, should be refined with detailed cost and tax data to improve forecast accuracy. This analysis underscores the importance of precise financial modeling and realistic assumptions in strategic planning.

References

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