Flannery Furnishings has $150,000 in sales. The company expects that its sales will increase 30% this year. Flannery'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 thousands of dollars) is
Inventories = $7.50 + 0.1875(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?
The solution explains how to determine the year end inventory turnover ratio.