Essay: Forecasting Growth in a Firm

Sample Essay

The percentage growth rate of net sales for Micro Chip Computer Corporation has been calculated using the company’s financial statements. The average growth rate is calculated by dividing the difference of sales of two years by the amount of sales of the base year.

Growth rate = (Sales of current year – Sales of base year) / Sales of base year

The rate of growth from 2004 to 2005 is 23.06 percent which is arrived at by dividing the difference between sales of two years which is $871 by the sales of the base year which is $11,062. This same methodology is applied for calculating the net sales growth rate for the period of FY 2006, 2007 and 2008. The growth rate estimated for 2006 is -23.06 percent, the growth rate for 2007 is estimated at -33.11 percent and it is estimated that the growth rate for 2008 is 35.71 percent.

Year	2004	2005	2006	2007	2008
Sales	$11,062	$11,933	$9,181	$6,141	$8,334
Growth Rate	N/A	7.87%	-23.06%	-33.11%	35.71%

Table 1

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