Chapter 5

Chapter 5 - Michael Samuels 10/23/08 Jones ACCY 110 Fifth...

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Michael Samuels 10/23/08 Jones ACCY 110 Fifth Homework Use Hewlett Packard’s financial statements to answer these questions. They are in a separate file. You will use HP’s financial statements in future homeworks as well. 1. Predict revenues in 2007. Assume that revenues continue to grow at the same percentage rate that they did from 2005 to 2006. Use your answer when appropriate in subsequent questions. Growth Rate from 2005 to 2006 : 5.72% - Revenue \$86,696,000,000 to \$91,658,000,000 2007 Revenue: \$91,658,000,000 * 1.0572 = \$96,905,115,000 2. Do products or services have a larger growth rate of revenues in 2006? Do products or services have a larger gross profit margin in 2006? Show your calculations. Services = \$13,930,000,000 / \$17,773,000,000 = 1.0226 = 2.26% Products = \$73,557,000,000 / \$68,945,000,000 = 1.0669 = 6.69% The growth rate for products is higher than for services Services = \$13,930,000,000 / \$17,773,000,000 = .784 so the Gross PM = 21.6% Products = \$55,248,000,000 / \$73,577,000,000 = .751 so the Gross PM = 24.9% 3. What do your answers to question 2 suggest about likely changes in the overall gross profit margin for HP in 2007? With this information all you can provide is a

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This note was uploaded on 10/20/2010 for the course ACCY 110 taught by Professor Christopherjones during the Spring '10 term at GWU.

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Chapter 5 - Michael Samuels 10/23/08 Jones ACCY 110 Fifth...

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