Regression and inventories
Jasper Furnishings has $275 million in sales. The company expects that its sales will increase 10% 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 = $30 + 0.255(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? 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
What are your forecasts of the company's year-end inventory turnover ratio? Round your answer to two decimal places.