Estimated relationship between inventories and sales

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Reference no: EM13287528

Tiffianys Furnishings has $400 million in sales. The company expects that its sales will increase 8% 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 = $35 + 0.21(Sales)

1. 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? Round your answer to the nearest hundredth of million dollar.

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

Reference no: EM13287528

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