End inventory level and the inventory turnover ratio

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Jasper Furnishings has $300 million in sales. The companyexpects that its sales will increase 12 percent this year.Jasper’s CFO uses a simple linear regression to forecast thecompany’s inventory level for a given level of projectedsales. On the basis of recent history, the estimated relationshipbetween inventories and sales (in millions of dollars) is Inventories = $25 +0.125 (Sales) Given the estimated sales forecast and the estimatedrelationship between inventories and sales, what are your forecastsof the company’s year-end inventory level and the inventory turnover ratio?

Reference no: EM131189258

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