Barnes & Noble sells books, magazines, music, and videos through retail stores and online. For a retailer like Barnes & Noble, inventory is a critical element of the business, and it is necessary to carry a wide array of titles. Inventories constitute the largest asset on Barnes & Noble's balance sheet, totaling $1,293 million at the end of 2015 and $1,235 million at the end of 2014. Assume that in 2015, sales totaled $6,070 million and cost of sales totaled $4,197 million.

REQUIRED
a. Compute the inventory turnover ratio for Barnes & Noble for 2015.
b. Over the last two years, suppose the number of Barnes & Noble retail stores has remained constant and sales have grown at a compounded annual rate of 11.6%. Assume that the number of stores will remain constant and that sales will continue to grow at an annual rate of 11.6% each year between Year +1 and Year +5. Also assume that the future cost of goods sold to sales percentage will equal that realized in 2015 (which is very similar to the cost of goods sold percentage over the past three years). Project the amount of inventory at the end of Year +1 through Year +5 using the inventory turnover ratio computed in Requirement a. Also compute the percentage change in inventories between each of the year-ends between 2015 and Year +5. Does the pattern of growth in your projections of Barnes & Noble inventory seem reasonable to you considering the assumptions of smooth growth in sales and steady cost of goods sold percentages? Explain.
c. The changes in inventories in Requirement b display the sawtooth pattern depicted in Exhibit 10.4. Smooth the changes in the inventory forecasts between 2015 and Year +5 using the compound annual growth rate in inventories between the end of 2015 and the end of Year +5 implied by the projections in Requirement b. Does this pattern of growth seem more reasonable? Explain.
d. Now suppose that instead of following the smoothing approach in Requirement c, you used the rate of growth in inventory during 2015 to project future inventory balances at the end of Year +1 through Year +5. Use these projections to compute the implied inventory turnover rates. Does this pattern of growth and efficiency in inventory for Barnes & Noble seem reasonable? Explain.