Charlie\'s Cycles Inc. has $80 million in sales. The company expects that its sa
ID: 2715613 • Letter: C
Question
Charlie's Cycles Inc. has $80 million in sales. The company expects that its sales will increase 7% this year. Charlie'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 as follows: Inventories = 10 + 0.1255(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
Sales=$90 million g=9% S1==$90 million x 1.09=$98.1million Inventories = $14+ 0.1105(Sales) =14+(.1105x98.1)= $24.84million ITEM:2 inventory turnover ratio= Sales/Inv. = 98.1 /24.84 =3.949million