Edwards Industries has $320 million in sales. The companyexpects that its sales will increase 12% this year. Edwards’ CFO uses a simple linearregression to forecast the company’s receivables level for a given level of projected sales.On the basis of recent history, the estimated relationship between receivables and sales (inmillions of dollars) is as follows:Receivables = $9.25 + 0.07(Sales)Given the estimated sales forecast and the estimated relationship between receivables andsales, what are your forecasts of the company’s year-end balance for receivables and itsyear-end days sales outstanding (DSO) ratio? Assume that DSO is calculated on the basisof a 365-day year.
Edwards Industries has $320 million in sales. The companyexpects that its sales will increase 12% this year. Edwards’ CFO uses a simple linearregression to forecast the company’s receivables level for a given level of projected sales.On the basis of recent history, the estimated relationship between receivables and sales (inmillions of dollars) is as follows:Receivables = $9.25 + 0.07(Sales)Given the estimated sales forecast and the estimated relationship between receivables andsales, what are your forecasts of the company’s year-end balance for receivables and itsyear-end days sales outstanding (DSO) ratio? Assume that DSO is calculated on the basisof a 365-day year.
Chapter16: Supply Chains And Working Capital Management
Section: Chapter Questions
Problem 11P
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Edwards Industries has $320 million in sales. The company
expects that its sales will increase 12% this year. Edwards’ CFO uses a simple linear
regression to
On the basis of recent history, the estimated relationship between receivables and sales (in
millions of dollars) is as follows:
Receivables = $9.25 + 0.07(Sales)
Given the estimated sales forecast and the estimated relationship between receivables and
sales, what are your forecasts of the company’s year-end balance for receivables and its
year-end days sales outstanding (DSO) ratio? Assume that DSO is calculated on the basis
of a 365-day year.
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