Financial planning and forecasting

Assignment Help Financial Management

Reference no: EM131916221

Financial Planning and Forecasting: Using Regression to Improve Forecasts Regression analysis is a statistical technique that fits a line to observed data points so that the resulting equation can be used to forecast other data points. It is useful in excess capacity and economies of scale situations. Economies of scale occur when the ratio of asset to sales will change as the size of the firm increases. Regression analysis can lead to improved financial forecasts and better information which can be used to improve management's actions. Quantitative Problem: Jasper Jewelry has $150 million in sales. The company expects that its sales will increase 6% 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 as follows: Inventories = $11 + 0.08(Sales) Given the estimated sales forecast and the estimated relationship between inventories and sales, what is your forecast of the company's year-end inventory level? Round your answer to two decimal places. Do not round intermediate calculations. $ million

Reference no: EM131916221

Questions Cloud

What is portfolio return : If you have a portfolio made up of 35 percent Yum Brands, 30 percent Raytheon, and 35 percent Coca-Cola, what is your portfolio return?

The average return and standard deviation of wholemart : The average return and standard deviation of WholeMart are 12 percent and 35 percent; and of Fruit Fly are 17 percent and 30 percent.

What was market risk premium during these ten years : The average annual T-bill yield during the same period was 3.35 percent. What was the market risk premium during these ten years?

Categorical variables Fuel Type and Color : Create dummy variables for the categorical variables Fuel_Type and Color.

Financial planning and forecasting : Given the estimated sales forecast and the estimated relationship between inventories and sales, what is your forecast of the company's year-end inventory level

In the binomial option pricing model : In the binomial option pricing model the:

What would be the nominal and effective cost of such credit : What would be the nominal and effective cost of such a credit? what would be the effective cost of the bank loan?

Which best describe L Oreals approach : Of the five global product and communications strategies, which best describe L'Oreals approach?

Expanding rapidly-currently needs to retain all of earnings : Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends.

User Account

All Pages