Percentage Sales Method

Topics: Revenue, Generally Accepted Accounting Principles, Sales Pages: 3 (731 words) Published: February 24, 2013
Question 1

- Determine the year-to-year percentage annual growth in total net sales

Year Sales Growth
2000 $11,062
2001 $11,933 (11933-11062)*100/11062 = 7.87%
2002 $9,181 (9181-11933)*100/11933 = -23.06%
2003 $6,141 = -33.11%
2004 $8,334 = 35.71%

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

The target figure would be 10% more than $8,334; that is, $9,167. It seems unlikely that the company will be able to achieve its sales goal. The only significant large growth rate happened in 2004, while during the previous 3 years it was either a bit smaller than 10% (in 2001) or strongly negative (in 2002 and 2003). So the trend in sales is still pointing down. In fact, if we find the average growth rate, we find that it's been -3.5% since 2001. So I believe, based solely on sales data, that the company will not be able to increment its sales by 10% in 2005.

Question 2

- Use the Percentage Sales Method and a 20% increase in sales to forcast Apples' Consolidated Statement of Operations for the period of September 26, 2004 through Setemeber 25, 2005. Assume a 15% tax rate and restructuring cost of 2% of the new sales figure

In order to answer this question, we need to:

1) Find the sales figure forecast.
2) Find what percentage of the sales represent the different items in the provided 2003-2004 statement.
3) Apply that percentage to the forecasted sales in order to find the estimated value of the other items in the statement for 2004-2005.

The first step is easy. Since sales were $8,334, then the forecast for next year is 20% more than that figure; that is, $10,000.80.

So here's the statement, including the percentage of sales each of...
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