Jasper Furnishings has $250 million in sales. The company expects that its sales

Question

Jasper Furnishings has $250 million in sales. The company expects that its sales will increase 15% this year. Jasper's CFO uses a simple linear regression to forecast the company's inventory level for a given level of projected sales. On the basis of recent history, the estimated relationship between inventories and sales (in millions of dollars) is shown below.

Inventories = $20 + 0.285(Sales)

Given the estimated sales forecast and the estimated relationship between inventories and sales, what are your forecasts of the company's year-end inventory level? Enter your answer in millions. For example, an answer of $25,000,000 should be entered as 25. Round your answer to two decimal places.

$   ?? million

What are your forecasts of the company's year-end inventory turnover ratio? Round your answer to two decimal places.

??

Explanation / Answer

Inventories = 20m + .285 (Sales) Inventories = 20m + .285 (250m*1.15) Inventories = 20m + .285 (287.5m) Inventories = 20m + 81.94m Inventories = 101.94m Answer is 102 Inventory Turnover Ratio = 287.5/101.94 Inventory Turnover Ratio = 2.82 Times

Related Questions

Navigate

• Browse (All)
• Browse J
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.