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Managerial Finance - Micro Chip Computer Corporation

The Micro Chip Computer Corporation Shows a total of net sales for the years of 2000 – 2004. The total net sales have seemed to drop since 2000. I will compute the year-to-year percentage annual growth in total net sales by taking the current year total net sales and subtracting the previous years. I will then multiply that by 100 and then divide that by the previous year’s total net sales. This will give me the annual percentage growth. The formula will be (current year total net sales – previous year total net sales) * 100 / previous year’s total net sales.
Year Net Sales Annual Growth
2000 $11,062
2001 $11,933 (11,933-11,062)*100/11062 = 7.87%
2002 $9,181 (9,181-11,933)*100/11,933 = -23.06%
2003 $6,141 (6,141-9,181)*100/9,181 = -33.11%
2004 $8,334 (8,334-6,141)*100/6,141 = 35.71%

The next step is to compute the total sales forecast with a 10% growth. The total net sales in 2004 were $8,334. I would multiply this by 110% and get the forecasted net sales for the upcoming year. 8,334*110% = $9,176.4 in total sale forecasted in order to gain a 10% growth.
I would not predict that this company would be able to reach the 10% forecast growth due to the fact that they have only accomplished this once in the past four years and two of them have shown a negative growth. The 2004 year has shown a vast improvement with a 35.71% growth but there are no records to indicate that it will continue to climb.
Micro Chips’ consolidated statement of operations will show the forecasted sales through 9/26/04 to 9/25/05 with a 15% tax rate and a 2% restructuring cost.

Current Percent of sales 9/26/04 – 9/25/05
Total net sales $8,334 20% increase $10,000
Cost of sales...