6 Fairchild Garden Supply expects$730 million of sales this year, andit forecasts a 15% increase for nextyear. The CFO uses this equationto forecast inventory requirementsat different levels of sales:Inventories = $30.2 +0.25(Sales).All dollars are in millions. Thefirm's cost of goods sold isexpected to be 75% of sales. Whatis the projected inventory turnoverratio for the coming year? Do notround intermediate calculations.a. 2.62 times b. 3.04 times c. 3.50times d. 2.28 times e. 2.96 times

Inventory turnover ratio is one of the efficiency ratioes used in business. This shows how…

Answered: Fairchild Garden Supply expects $730…

Fairchild Garden Supply expects $730 million of sales this year, and it forecasts a 15% increase for next year. The CFO uses this equation to forecast inventory requirements

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

Fairchild Garden Supply expects
$730 million of sales this year, and
it forecasts a 15% increase for next
year. The CFO uses this equation
to forecast inventory requirements
at different levels of sales:
Inventories = $30.2 +0.25(Sales).
All dollars are in millions. The
firm's cost of goods sold is
expected to be 75% of sales. What
is the projected inventory turnover
ratio for the coming year? Do not
round intermediate calculations.
a. 2.62 times b. 3.04 times c. 3.50
times d. 2.28 times e. 2.96 times

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