Year-on-Year (YoY) Analysis

The assignment content discusses the year-over-year (Y2Y) growth percentage for Micro Chip Computer Corporation's sales, as well as the company's target revenue and income statements for 2009. The Y2Y growth percentage was calculated using the formula: (Net Sales in Current Year - Net Sales in Last Year) / Net Sales in Last Year. The corporation achieved a Y2Y growth of 35.71% in 2008, which led to the assumption that they may have achieved their target of 10% Y2Y growth in 2009. Additionally, the assignment content provides income statements for both 2008 and September 2009, highlighting various line items such as cost of sales, operating expenses, and net income.

Micro Chip Computer Corporation
Solution 1
Year on Year percentage growth on sales is the measure that provides how much in percentage
has the net sales grown of fallen as compared to the immediate past year.
The formula is:
Year to Year Net Sales Growth = (Net Sales in Current Year - Net Sales in Last Year) / Net Sales
in Last Year
The company could achieve an Y2Y growth of 35.71% in 2008. Looking at this achievement of
the company in the recent year it can be assumed that the company may have achieved its target
of 10% Y2Y growth in 2009.
2008 2007 2006 2005 2004
Net Sales
$
8,334.00 $ 6,141.00 $ 9,181.00
$
11,933.00
$
11,062.00
Growth
$
2,193.00
$
(3,040.00) $ (2,752.00)
$
871.00
Growth % 35.71% -33.11% -23.06% 7.87%
Solution 2
Target Revenue in 2009
Expected Growth 10%
Net Sales in 2008 $ 8,334.00
Target Revenue in 2009 (8334 * 10% $ 9,167.40
Since the company could achieve an Y2Y growth of 35.71% in 2008. Looking at this
achievement of the company in the recent year it can be assumed that the company may have
achieved its target of 10% Y2Y growth in 2009.
Solution 3
Percentage of sales method in income statement is a method where each line item of income
statement is calculated as a percentage measure of the Net Sales figure. Then such percentage is
then used to calculate the figures with revised data or Net Sales figure.
Percentage of Sales formula: Measure of Line Item / Net Sales * 100
Amount
% of
Sales
Sept 2009
Forecast
Sales $ 8,334.00 100.00% $ 10,834.20
Cost of Sales $ 5,458.00 65.49% $ 7,095.40
Gross Margin $ 2,876.00 34.51% $ 3,738.80

Operating Expenses:
R & D $ 525.00 6.30% $ 682.50
Selling, General and Administrative $ 691.00 8.29% $ 898.30
In-process R & D
Restructuring Costs
Total Operating Expenses $ 1,216.00 14.59% $ 1,580.80
Operating Income $ 1,660.00 19.92% $ 2,158.00
Total Interest and Other Net Income $ 194.00 2.33% $ 252.20
Income before provision for Income
taxes $ 1,854.00 22.25% $ 2,410.20
Provision for Income Taxes (15%) $ 278.10 3.34% $ 361.53
Net Income $ 1,575.90 18.91% $ 2,048.67
Solution 4
Amount % of Sales
Sept 2009
Forecast
Sales $ 8,334.00 100.00% $ 10,834.20
Cost of Sales $ 5,458.00 65.49% $ 7,095.40
Gross Margin $ 2,876.00 34.51% $ 3,738.80
Operating Expenses:
R & D $ 525.00 6.30% $ 682.50
Selling, General and Administrative $ 691.00 8.29% $ 898.30
In-process R & D
Restructuring Costs $ 541.71
Total Operating Expenses $ 1,216.00 14.59% $ 2,122.51
Operating Income $ 1,660.00 19.92% $ 1,616.29
Total Interest and Other Net Income $ 194.00 2.33% $ 252.20
Income before provision for Income
taxes $ 1,854.00 22.25% $ 1,868.49
Provision for Income Taxes (15%) $ 278.10 3.34% $ 280.27
Net Income $ 1,575.90 18.91% $ 1,588.22
We have assumed that each line item of profit and loss account in the given case maintain same
percentage in 2009 as well which it had in the previous year with the Net Sales figure.
Although in the era of great uncertainties in the finance and economy such assumption seems
unreasonable since it cannot be expected that each line item will maintain the same ratio.