Jasper Furnishings has $300 million in sales. The company expects that its sales will increase 12% this year. Jasper's CEO 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: Inventories = $25 + 0.125 (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 turnover ratio?
This solution provides example of Jasper Furnishing in forecasting of turnover ratio using regression analysis given estimated sales.