5. Using regression analysis to forecast assets The AFN equation and the financial statement-forecasting approach both assume that assets grow at relatively the same rate as sales. However, the relationship between assets and sales is often a little more difficult than that. In particuiar, some firms use regression analysis to predict the required assets needed to support a given level of sales. Mainway Toys Co. has used its historical sales and asset data to estimate the following regression equations: Mainway Toys Co, currently has sales of $1,110,000, bug it expects sales to grow by 20% over the next year. Use the regression models to calculate Mainway Toys Co.'s forecasted values for accounts receivable and inventories needed to support next year's sales. Based on the next year's accounts receivable and inventory levels predicted by Mainway Toys Co.'s regression equations, the firm's DSo for next year is expected to be Use 365 days as the length of a year in all calculations. The AFN equation and the financial statement-forecasting approach relationship between assets and sales is often a little more difficult assets needed to support a given level of sales. Mainway Toys Co. has used its historical sales and asset data to estir Based on the next year's accounts receivable and inventory levels predit is expected to be Use 365 days as the length of a ye. relationship between assets and sales is often a little more difficult t assets needed to support a given level of sales. Mainway Toys Co. has used its historical sales and asset data to estir Mainwsu Taun Ma. xpects sale and inven Based on the next year's accounts receivable and inventory levels predict is expected to be Use 365 days as the length of a year Mainway Toys Co. has used its historical sales and asset Mainway Toys Co. currently has sales of $1,110,000, but it e Mainway Toys Co.'s forecasted values for accounts receivable is expected to be Use 365 days as the lengtr