Paper Topic:
financial management
Financial Management 2006 Financial Management Shown below are Micro Chip Computer Corporations net sales and the computed percentage annual growth in 2000 2001 2002 2003 2004 Net Sales (in millions 11 ,062 11 ,933 9 ,181 6 ,141 8 ,334 Percentage Annual Growth in Net Sales - 7 .87 -23 .06 -33 .11 35 .71 Percentage computed based on the difference of the current and the previous year 's net sales For the year ended September 25 , 2004 , Micro Chip Computer Corporation realized a 35 .71 increase in percentage annual net sales
. If in 2005 the company targets a 10 growth in annual revenue or equivalent to 9 ,167 .40 net sales it is probable that it is attainable as long as the company can maintain its sales performance in 2004
The forecasted Consolidated Statement of Operations for the year ending September 25 , 2005 is shown below
Micro Chip Computer Corporation Forecasted Consolidated Statement of Operations For the period September 26 , 2004 through September 25 , 2005 of sales Sales
100 .00000 10 ,000 .80
Cost of Sales
65 .49076 6 ,549 .60
Gross Margin 3 ,451 .20
Operating Expenses : R D
6 .29950 630 .00 Selling , General Administrative
8 .29134 829 .20 In-Process R D
0 .00000 0 .00 Restructuring Costs
2 .00000 200 .02
Operating Income 1 ,791 .98 2 .32781 232 .80
Income Before Provision for Income Taxes 2 ,024 .78
Provision for Income Taxes (15 303 .72
Net Income 1 ,721 .07 According to Higgins (1998 , earnings are an indicator of the financial health of a company (p .6 . By using the Percentage Sales Method , the behavior of the different cost that can affect the earnings of Micro Chip 's can now be easily determined and analyzed
Reference
Higgins , R . C (1998 . Interpreting financial statements . Analysis for financial management (p . 6 . Washington . Irwin McGraw-Hill
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