Microsoft Questions with answers Essay
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Questions with answers:
Determine the year-to-year percentage annual growth in total net sales.
The year to year percentage annual growth in total sales is following:
2. Based only on your answers to question #1, do you think the company will hit its sales goal of +10% annual revenue growths in 2005? Determine the target revenue figure, and explain why you do or do not feel that the company can hit this target.
Yes, the company may meet its sales of goal of +10% annual revenue targets in 2005 because in 2004 it was able to generate increase in revenues by 36%. The increase of revenues however necessitated increase in stockholders equity by 89% and increase in cash, cash equivalents and short term investments by 14%. Therefore by increasing the stockholders equity by 89% or by even a lower rate, the goal of +10% increases in 1995 revenues would not appear impossible or unreasonable.
3. Next, consider Micro Chip’s Consolidated Statement of Operations for the year ended September 25, 2004 and answer questions 1 and 2.
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. Discuss your results from question number #1. What assumptions have you made? Do any of your assumptions seem unreasonable?
Increasing sales by 20% is not too optimistic since sales increased by 36% from 2003 to 2004, when cash and cash equivalents increased by 14% while total assets increase by 16% per annum. The increase in assets may be explained by increase in stockholder’s equity. Increase in stockholders’ equity entails additional investment by owners.
Hence, assuming the same or even lesser percentage increase of investment by the owners in 2005, the 20% annual growth in revenues is not unreasonable.
As computed the average collection period is in 2005 is 33 days computed by dividing 360 days by the receivable turnover. Receivable turnover is computed by dividing net sales by the average accounts receivable, which are extracted or squeeze figures from the given data. (See spreadsheet where total assets are made equal to total liabilities and stockholders’ equity.)
Inventory Turnover is 6.87 times a year based on average inventory which are also extracted from given data (See the same spread sheet)
Total Asset Turnover is 0.75 times a year (See the same spread sheet)
An income statement (Investment Glossary, 2004) was also reconstructed to show the computation of cost of sales which was used as numerator in computing inventory turnover. (See spreadsheet)
Summary of assumptions made in 1995 include the following.
Increases in cash, cash equivalents and short term investments and total assets in 2005 are same as that in 2004.
Accounts receivable end was assumed to be 5% of the total sales.
Inventory, end figures are squeeze figure from total assets after deducting accounts receivable and cash , cash equivalents and short term investments.
Investment Glossary, 2004, <http://www.tiaa-crefbrokerage.com/invest_glosry_InInd.htm>
ABC FITNESS IS PART 2 OF ASSIGNMENT.
Use the annual information found on ABC FITNESS
Calculate the following asset activity ratios for the end of 2005:
Average Collection Period=
360/ Average receivable turnover ,
Receivable turnover =
Net sales/ Average Receivable
Inventory Turnover =
Cost of Sales/ Average Inventory
Total Asset Turnover
net sales/ average total assets
Data given :
cost of sales