James Inc. is a mid-sized manufacturer of residential water heaters. Sales have grown during the last several years, and the company's production capacity needs to be increased. The company's management wonders if national housing starts might be a good indicator of the company's sales: National James Inc Housing Starts (millions) Annual Sales Year (millions of dollars) I 6.2 57 2 5.1 59 3 6.5 65 4 7.9 78 5 6.3 72 6 7.4 80 7 7.0 86 a. Develop a simple linear regression analysis between James Inc' sales and national housing starts. Forecast James Inc' sales for the next two years. The National Home Builders Association estimates that national housing starts will be 7.1 million and 8.0 million for the next two years. b. What percentage of variation in James Inc' sales is explained by national housing starts? c. Would you recommend that James Inc management use the forecast from Part a to plan facility expansion? Why or why not? What could be done to improve the forecast?

James Inc. is a mid-sized manufacturer of residential water heaters. Sales have grown during the last several years, and the company's production capacity needs to be increased. The company's management wonders if national housing starts might be a good indicator of the company's sales: National James Inc Housing Starts (millions) Annual Sales Year (millions of dollars) I 6.2 57 2 5.1 59 3 6.5 65 4 7.9 78 5 6.3 72 6 7.4 80 7 7.0 86 a. Develop a simple linear regression analysis between James Inc' sales and national housing starts. Forecast James Inc' sales for the next two years. The National Home Builders Association estimates that national housing starts will be 7.1 million and 8.0 million for the next two years. b. What percentage of variation in James Inc' sales is explained by national housing starts? c. Would you recommend that James Inc management use the forecast from Part a to plan facility expansion? Why or why not? What could be done to improve the forecast?

Foundations of Business (MindTap Course List)

6th Edition

ISBN:9781337386920

Author:William M. Pride, Robert J. Hughes, Jack R. Kapoor

Publisher:William M. Pride, Robert J. Hughes, Jack R. Kapoor

Chapter15: Using Management And Accounting Information

Section15.8B: Financial Ratios

Problem 1CC

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