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Problem
#45684

Micro Chip Computer Corporation- year-to-year percentage annual growth in total net sales Calculation of the following asset activity ratios: 1. Average Collection Period 2. Inventory Turnover 3. Total Asset Turnover

The selected financial statements for Micro Chip Computer Corporation are given.  Answer questions 1 and 2 below based on the financial data.

   1. Determine the year-to-year percentage annual growth in total net sales.
   2. Based only on your answers to question #1, do you think the company will hit its sales goal of +10% annual revenue growth in 2005? Determine the target revenue figure, and explain why you do or do not feel that the company can hit this target.


   1. Use the Percentage Sales Method and a 20% increase in sales to forecast Micro Chip's Consolidated Statement of Operations for the period September 26, 2004 through September 25, 2005. Assume a 15% tax rate and restructuring costs of 2% of the new sales figure.
   2. Discuss your results from question number #1. What assumptions have you made? Do any of your assumptions seem unreasonable?

Use the annual information found here to answer this question. Calculate the following asset activity ratios for the end of 2005:

   1. Average Collection Period
   2. Inventory Turnover
   3. Total Asset Turnover

Attached file(s):
Attachments
FIN410_U2_ips.pdf  View File
FIN410_U2_ips2.pdf  View File
FIN410_U2_ips3.pdf  View File

Attachment Content Summary (Note: view attachment at the above link before purchasing. Actual attachment content may vary slightly from that shown below.)

FIN410_U2_ips.pdf
Micro Chip Computer Corporation
Selected Financial Data

Fiscal Years 2004 2003 2002 2001 2000
(in millions except share
and per share amounts)
Net Sales $ 8,334 $ 6,141 $ 9,181 $ 11,933 $11,062
Net Income (loss) $ 811 $ 519 $ (1,245) $ (995) $ 424
Earnings (loss)
per common
share:
Basic $ 5.65 $ 3.84 $ (9.15) $ (6.89) $ 3.50
Diluted $ 4.64 $ 3.07 $ (9.15) $ (6.89) $ 3.45
Cash Dividends $ -- $ -- $ -- $ 0.12 $ 0.48
declared per
common share
Shares used in
computing
earnings (loss)
per share (in
thousands):
Basic 143,500 135,000 136,000 144,500 121,192
Diluted 174,900 169,000 136,000 144,500 123,047
Cash, cash $ 5,426 $ 4,600 $ 3,859 $ 3,945 $ 952
equivalents, and
short-term
investments
Total Assets $ 6,161 $ 5,289 $ 5,233 $ 6,364 $ 6,231
Long-term Debt $ 300 $ 954 $ 951 $ 949 $ 303
Shareholder's $ 3,104 $ 1,642 $ 1,200 $ 2,058 $ 2,901
Equity
FIN410_U2_ips2.pdf
Micro Chip Computer Corporation



Consolidated Statements of Operations For the period September 26, 2004 through
September 25, 2004


Sales $8,334.00
Cost of Sales $5,458.00
Gross Margin $2,876.00
Operating expenses:
R&D $525.00
Selling, General, and Administrative $691.00
In-process R & D ---------
Restructuring costs ---------
Total Operating Exp $1,216.00
Operating income $1,660.00
Total interest and other Income net $194.00
Income before provision for Income taxes $1,854.00
Provision for income Taxes (15%) $278.10
Net income $1,575.90

Solution Summary

The solution forecasts Micro Chip's Consolidated Statement of Operations using Percentage Sales Method

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