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REGRESSION AND INVENTORIES Charlie's Cycles Inc. has $110 million in sales. The company expects that its sales will increase 5% this year Charlie's CFO uses a simple linear regression to forecast the company’s inventory level for a given level of protected sales. On the basis of recent history, the estimated relationship between inventories and sales (in millions of dollars) is as follows: Inventories = $9 + 0.0875(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 and its inventory turnover ratio?

BuyFind

Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781337395250
BuyFind

Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781337395250

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Chapter
Section
Chapter 17, Problem 11P
Textbook Problem

REGRESSION AND INVENTORIES Charlie's Cycles Inc. has $110 million in sales. The company expects that its sales will increase 5% this year Charlie's CFO uses a simple linear regression to forecast the company’s inventory level for a given level of protected sales.

On the basis of recent history, the estimated relationship between inventories and sales (in millions of dollars) is as follows:

Inventories = $9 + 0.0875(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 and its inventory turnover ratio?

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