Question

Week 11 Assignment   - YOUR NAME

Complete the following problems – Projecting Revenue, Costs of Goods Sold and Inventory.

Use the following data for Walton’s in Years X-1 and X to project revenues, cost of goods sold, and inventory for Year X+1. Assume that Walton’s Year X+1 revenue growth rate, gross profit margin, and inventory turnover will be identical to Year X.

Project the average inventory balance in Year X and use it to compute the implied ending inventory balance.  

Round to the nearest dollar except for Inventory Turnover (IT).  For IT round to 2 places beyond the decimal point.

Walton’s (data in millions)

	Year X-1	Year X	Year X+1
Revenue	$ 58,790	$ 63.541	?
Cost of Goods Sold	38,518	42,445	?
Ending Inventory	7,250	7,350	?
Inventory Turnover		?
Average Inventory			?

Replace the “?” with your answers and show your work below.

Answer 1

	Year X-1	Year X	Year X+1
Revenue	58790	63541	68675.1128
Cost of Goods Sold	38518	42445	45875
Ending Inventory	7250	7350	7250
Inventory Turnover		1.45
Average Inventory			7300

Revenue for Year X+1

Growth rate=(63541-58790)/58790=8.08%

Year X+1 = 63541*1.0808

Cost of Goods Sold for Year X+1

Gross Margin for yearX =(63541-42445)/63541=33.20%

Cost of Goods Sold=68675*66.8%= 45875

Invesntory Turnnover for Year-X

Cost of Good Sold/ Average Inventory

=(42445/(7250+7350)/2)=1.45 times

Ending Inventory for year=X+1

Average Inventory=( Beg Inv+ Ending Inv)/2

7300X2=7350+Ending Inventory

Ending Inventory = 7250