# Unit 2 IP Essay

Submitted By Danoll7
Words: 509
Pages: 3

FINA310-1404B-04
Unit 2 IP
AIU
In this paper it will go over the Micro Chip Corporation year to year annual growth in net sales to see if it achieved its sales goal of a +10% annual growth in 2009. And to find what the target revenue is and an opinion on if this company could hit this target revenue or not. It will use the percentage sales method sales ending in 09/25/2009 and a 25% increase in sales to predict the company Consolidated Statement of Operation for the period of 09/26/20008 through 09/25/2009 by adding a 15% tax rate and a restructuring cost of 5% of the new sales.
Micro Chip Corporation
The year to year percentage growth in total net sales.
Using the formula (current year - pervious year) divided by pervious year equals percentage of annual growth.
2004. \$11,062
2005. \$11,933, (11,933 - \$11,062) / \$11,062 = .0787 = 7.87%
2006. \$9,181, (\$9,181 - \$11,933) / \$11,933 = -.2306 = -23.06%
2007 \$6,141, (\$6,141 - \$9,181) / \$9.181 = -.3311 = -33.11%
2008. \$8,334 (\$8,334 - \$6,141) / \$6,141 = .3571 = 36.71%
Now for the target figure of 10% and more from the year 2008 for the year 2009.
2008. \$8,334 x 10% = \$833.40 \$8,334 + \$833.40 = \$9,167.40 Target annual growth revenue for 2009.
It is My opinion that they will not meet their goal of 10 % increase as they have declined in 2006 and 2007 as the average growth rate between 2005 to 2008 was a -3.5%. It could be possible if Sales and productivity increase but that is highly unlikely to happen given this data.
Now let’s consider that the company increase sales by 25% and 15% tax rate and restructuring cost 5% of the new sales figure. 2008 Forecast for 2009 Sales \$8,334, \$8334 x 25%= \$2083.50 (\$2083.50 +\$8334) = \$10,417.50 Rounded \$10,418.00 Cost of Sales \$5,458, \$5,458/\$8334= 65.5%, (\$10,417.50 x 65.5%) = \$6,823.46 Rounded \$6,824.00 Gross Margin \$2,876, \$2,876/\$8,9334 = 34.5%, (10,417.50 x 34.5%) = \$3594.04 Rounded \$3,594.00
Operating Expenses ------ R & D \$525, \$525/\$8,8334 = 6.3%, (\$10,417.50 x 6.3%) = \$656.30 Rounded \$656.00
Selling, General, and \$691, \$691/\$8334 = 8.3%, (\$10,417.50 x