Regression and inventories

Assignment Help Financial Management
Reference no: EM13813430

Regression and inventories

Charlie's Cycles Inc. has $120 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 = 10 + 0.0780(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.

Reference no: EM13813430

Questions Cloud

What is the npv of accepting the system : No More Books Corporation has an agreement with Floyd Bank whereby the bank handles $7.0 million in collections a day and requires a $450,000 compensating balance. No More Books is contemplating canceling the agreement and dividing its eastern region..
Project beta and internal rate of return : Project Alpha has an internal rate of return (IRR) of 15 percent. Project Beta has an IRR of 14 percent. Both projects have a required return of 12 percent.
Allocate the joint costs using relative weight : Landmark Coal operates a mine. During July, the company obtained 500 tons of ore, which yielded 250 pounds of gold and 63,700 pounds of copper. The joint cost related to the operation was $500,000. Gold sells for $325 per ounce and copper sells for $..
Required return that exceeds its rate of return : Which one of the following indicates a project has a required return that exceeds its rate of return?
Regression and inventories : Charlie's Cycles Inc. has $120 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. What are you..
Cash flow from operating activities using the annual reports : Obtain the required information about GE’s industrial cash flow from operating activities using the annual reports of GE for the years 2011 thru 2014. Based on the data you obtained in (b) above, state whether the cumulative industrial cash flow from..
Issues to be concerned about when increasing leverage : Debt Versus Equity Financing Look Before You Leverage!“Why do things have to be so complicated?” said Bob to Andrew, as he sat at his desk shuffling papers around. “I need you to come up with a convincing argument.” Bob’s company, Symonds Electronics..
What is total cost of the line of credit : Your client is a biochemist who has discovered a technique to create a new biofuel. He estimates it will take him 2 years to make it economically feasible at a cost of $2,000,000. Assume that loan is set up as interest-only (meaning any accrued inter..
About the rate of interest : Bank of America has granted you a ten year loan for $65,000. If your ten annual end of the year payments are $13,380.50, what is the rate of interest Bank of America is charging?

Reviews

Write a Review

 

Financial Management Questions & Answers

  Investors full profit per share on the option contract

Suppose a call option has an exercise price of $35, and the underlying stock is trading for $30. The cost of the option is $2, and the option expires in one month. A month later, the option stock is trading for $41. Assuming the investor exercises th..

  What is the available net working capital

On March 31, Adolpha, Inc. reported the following information on its financial statements. What is the available net working capital for Adolpha, Inc.?

  Bond outstanding with an annual coupon rate

General Mills has $1,000 par value, 12 year bond outstanding with an annual coupon rate of 3.60 per year, paid semi annually. Market interest rates on similar bonds are 12.70 percent. Calculate the bonds price today.

  Project breakeven and profitability measures

Describe the following project breakeven and profitability measures. Be sure to include each measure's economic interpretation.

  Explain two factors that affect the present value of asset

Which is better, a present value of $100 or a future value of $100? Please explain. Define and explain two factors that affect the present value of an asset. In five years, what is the future value of $4,000 if the interest rate is 10% and money is c..

  Bond issuer will not be able to make timely payments

Which of the following terms is the chance that the bond issuer will not be able to make timely payments?

  Well-diversified portfolio that mirrors the performance

A fund manager has a well-diversified portfolio that mirrors the performance of the S&P 500 and is worth $510 million. The value of the S&P 500 is 1,700, and the portfolio manager would like to buy insurance against a reduction of more than 5% in the..

  E-business activities with the partners for ordering

Take your company from last week and look at the business partnerships you would develop to support your new adventure. The needs of your company will have a variety of types of partners according to the products or services offered by your company. ..

  Determine amount that will be capitalized for installation

A proposal has been made to purchase a machining center at a price of $950,000. The delivery will cost an additional $12,000. It will take a three-person maintenance crew two standard 40-hour weeks that earn $25 an hour each to install the needed ele..

  Before tax required rate of return on debt

The Blue Bird Company plans a $79 million expansion. The expansion is to be financed by selling $50 million in new debt and $29 million in new common stock. The before tax required rate of return on debt is 5% and the required rate of return on equit..

  Describe the operating cycle and the cash cycle

Explain the connection between a firm’s accounting-based profitability and its cash cycle? Describe the operating cycle and the cash cycle. What are the differences?

  What is the net present value for this project

Phone home inc. is considering a new 4 year expansion project that requires an initial fixed asset investment of $3 million. The fixed asset will be depreciated straight-line to 0 over it's 4 year tax life, after which time it will have a market valu..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd