Regression and inventories

Assignment Help Financial Management

Reference no: EM13922964

Charlie's Cycles Inc. has $90 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 = 13 + 0.0515(Sales)

a. 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

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

Reference no: EM13922964

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