a) Use the following data to compute averafe revenues per store, capital spending per new store, and ending inventory per store.
b) Assume 200 additional stores will be added by the end of year +1 and assume that each new store will be pen for business for an average of one half year in year +1. for simplicity assume that year +1's growth will come only from opening new stores. Project year +1 sales revenues, Capital spending, and ending inventory.
Number of stores is 1707(year 4) and 1890(year 5)
Sales Rev is $64,816 (year 4) and $73094 (year 5)
Inventory is $9076 (year 4) and $10076 (year 5)
Capital Expenditures, net is $3,243 (year 4) and $3852 (year 5)
please help!
a) To compute the average revenues per store, capital spending per new store, and ending inventory per store, you will need to divide the respective values by the number of stores for each year.
1. Average Revenues per Store:
In year 4, the total sales revenue is $64,816 and the number of stores is 1707. Divide the revenue by the number of stores: 64816 / 1707 = $37.98 per store.
In year 5, the total sales revenue is $73,094 and the number of stores is 1890. Divide the revenue by the number of stores: 73094 / 1890 = $38.66 per store.
2. Capital Spending per New Store:
In year 4, the net capital expenditure is $3,243 and you need to calculate the spending per new store. As the number of new stores is not provided, you cannot compute this unless you have additional information.
In year 5, the net capital expenditure is $3,852 and you need to calculate the spending per new store. As the number of new stores is not provided, you cannot compute this unless you have additional information.
3. Ending Inventory per Store:
In year 4, the total inventory is $9,076 and the number of stores is 1707. Divide the inventory by the number of stores: 9076 / 1707 = $5.32 per store.
In year 5, the total inventory is $10,076 and the number of stores is 1890. Divide the inventory by the number of stores: 10076 / 1890 = $5.33 per store.
b) To project year +1 sales revenues, capital spending, and ending inventory, you need to make assumptions based on the given information.
1. Sales Revenues:
Assuming that each new store will be open for an average of one half year in year +1 and year +1's growth will come only from opening new stores, you can calculate the projected sales revenue by multiplying the average revenue per store by the additional number of stores.
For example, if the additional 200 stores are opened for an average of half a year, the total additional revenues would be: 200 * ($38.66 / 2) = $3,866.
You will need to adjust this calculation based on your assumptions and any other available information.
2. Capital Spending:
To project capital spending for year +1, you need to know the capital spending per new store. Unfortunately, this information is not provided in the given data. Without this information, you cannot accurately project capital spending for year +1.
3. Ending Inventory:
To project ending inventory for year +1, you will need to apply a similar assumption as in part b) regarding the number of new stores and the duration they will be open. Once you have those assumptions, you can calculate the projected ending inventory per store by multiplying the number of stores by the average ending inventory per store.
For example, if the additional 200 stores are open for an average of half a year, the projected ending inventory would be: 200 * ($5.33 / 2) = $533.
Again, adjust this calculation based on your assumptions and any other available information.