Fairchild Garden Supply expects $600 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.What is the projected inventory turnover ratio for the coming year?

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Inventory turnover ratio = Sales / Average inventoryAverage inventory = (Beginning inventory + Ending inventory) / 2Beginning inventory = Ending inventory of previous yearEnding inventory = Inventories = $30.2 + 0.25(Sales)Sales this year = $600 millionSales next year = $600 million * 1.15 = $690 millionEnding inventory next year = $30.2 + 0.25($690 million) = $202.7 millionAverage inventory = ($202.7 million + $202.7 million) / 2 = $202.7 millionInventory turnover ratio = $690 million / $202.7 million = 3.40

Fairchild Garden Supply Expects $600 Million of Sales This Year,and