Sales Analysis
The first question, obtaining the percentage change required subtracting the old figure from the new figure. Then, the total is divided by the old value as should in the formula below.
The resulting annual growth rate change after the calculation is;
Regarding question two of part one, the total change obtained indicates that the company can meet its sales objective, because in 2009 the sales rate is 9.99%, which is figure close to 10%. Although the results do not exceed or hit the 10% target the growth rate seems encouraging, hence the decision taken above. Therefore, the company will not attain the 10% growth rate, but sales will increase despite the drawback. Some of its downfalls are orchestrated by the 2006-2005 and 2006-2007 periods, where the company recorded high losses.
|
2005-2004 |
2006-2005 |
2007-2006 |
2008-2007 |
|
871 |
-2752 |
-3040 |
2193 |
|
7.87 |
-23.06 |
-33.11 |
35.71 |
|
0.0787 |
-0.2306 |
-0.3311 |
35.71 |
2009 Target Revenue
|
2009 Target Revenue |
2009-2008 |
|
9167.4 |
833 |
|
9167 |
9.995200384 |
|
|
9.99% |
Part 2
Using the sales method, I calculated the percentage of each item in 2007-2008 and 2008-2009. The 15% rate assumption was taken into consideration and restructuring costs of 5% (five percent) of the new sales figure. The overall outcome is as indicated in the below percentage change as depicted from the excel calculations.
|
|
2007-2008 |
% of Sales |
2009-2008 |
|
Sales |
8334 |
100.00 |
10417.50 |
|
Cost of Sales |
5458 |
65.49 |
6822.50 |
|
Gross Margin |
2876 |
34.51 |
3595.00 |
|
Operating Expenses |
|
|
|
|
R&D |
525 |
6.30 |
656.25 |
|
Selling General & Administrative |
691 |
8.29 |
863.75 |
|
In-process R&D |
|
|
|
|
Restructuring Costs |
|
520.88 |
|
|
Total Operating Expense |
1216 |
|
2041.00 |
|
Operating Income |
1660 |
|
1554.13 |
|
Total Interest and Other income |
194 |
2.33 |
242.50 |
|
Income before Tax |
1854 |
|
1796.63 |
|
Provision for Tax (15%) |
278.1 |
|
269.40 |
|
Net Income |
1575.9 |
|
1527.23 |
Regarding the results obtained in question one and after considering the percentage method, one can conclude the sales rate increased by 25% while the income level decreased by 4.25%, from $1575.9 to $1572.13. Similarly, the amount of expenses seems to have reduced. For example, the tax rate in the 2007-2008 period decreased from 3.34% to 2.59% translating to $8.61 decrease in costs. Lastly, the cost of sales according to the calculations seem to remain constant at 65.49%. Factoring a 15% produced an income tax of $269. On the other hand, a 5% restructuring cost of the total adjusted sales produced $520.88.
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