Assumptions for Microsoft Financial Statements Projection

1.SalesDue to the recent launch of in the buff products, such as Windows see and Microsoft Office 2007, higher growth rates are predicted for 2007 and 2008. The blunt revenue growth rate for the next two long time is to a fault very close to near analysts estimates. From 2008 to 2010, Microsoft get out suck no significant product going into the market, as Microsoft has just now launched a big numbers of products in 2006 and 2007, including X-box, Zune, Windows Vista, etc. In addition, the controversy in the high-tech industry testament generate use up the sales growth rate to 8% in these terce years. Besides, as Microsoft?s profit mostly comes from Operating system products, we expect them to launch a new version of Windows in 5 years from now. Therefore, their sales dexterity increase significantly in 2012. 2.Cost of Goods SoldIn recent years, COGS has averaged virtually 17.92% of sales. The multiplicative inverse of this ratio, or the ancestry turnover ratio, indicates that average sales are 5.58 times inventory. In other words, Microsoft endues 17.92 cents in inventory to keep one sawhorse of sales. This is non so good in equality to the performance of the industry. According to Hoovers, the turnover ratio of the industry is roughly 12.9, a lot higher than that of Microsoft. Therefore, we predict that Microsoft get out direct some changes to be more efficient. In other words, Microsoft will lessening their COGS/Sales ratio slightly over year. They will not be able to decrease the ratio significantly, because of the genius of their high-tech product. 3.Research and DevelopmentR&D/Sales dropped from about 20% to about 15% in 2005, and had remained low. Quarterly information also implies R&D/Sales close to 14% in 2007. After the launch of new products in 2006 and 2007, Microsoft will put more money in the research and increase impact to have... If you want to get a full essay, r ate it on our website: OrderEssay.net

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