The Income statement and balance sheet for Sting Inc. are provided here. Note that firm's capital expenditures are expected to rise by $50,000 in the new year. This will lead to an increase of $5,000 in accumulated depreciation. Sales next year should be $4.3M

1. Regress COGS against sales .

2. Using your sales trendline and annual sales data forecast the sales level in the next 3 years (3 years after the year with 4.3M in sales). Forecast using the trend line as well as at least one of the following: trend, linest, regression.

Sting Inc
Income Statement
For the Year Ended Dec. 31, 2009
	2009	2008
Sales	$3,850,000	$3,432,000
Cost of Goods Sold	$3,250,000	$2,864,000
Gross Profit	$600,000	$568,000
Selling and G&A Expenses	$330,300	$240,000
Fixed Expenses	$100,000	$100,000
Depreciation Expense	$20,000	$18,900
EBIT	$149,700	$209,100
Interest Expense	$76,000	$62,500
Earnings Before Taxes	$73,700	$146,600
Taxes	$29,480	$58,640
Net Income	$44,220	$87,960
Notes:
Tax Rate	40%
Sales history	Revenue	COGS
2005	$1,890,532	$1,570,200
2006	$2,098,490	$1,695,694
2007	$2,350,308	$1,992,400
2008	$3,432,000	$2,864,000
2009	$3,850,000	$3,250,000
2010	$4,300,000	$3,629,870

Sting Inc
Balance Sheet
As of Dec. 31, 2009
Assets	2009	2008
Cash and Equivalents	$52,000	$57,600
Accounts Receivable	$402,000	$351,200
Inventory	$836,000	$715,200
Total Current Assets	$1,290,000	$1,124,000
Plant & Equipment	$527,000	$491,000
Accumulated Depreciation	$166,200	$146,200
Net Fixed Assets	$360,800	$344,800
Total Assets	$1,650,800	$1,468,800
Liabilities and Owner's Equity
Accounts Payable	$175,200	$145,600
Short-term Notes Payable	$225,000	$200,000
Other Current Liabilities	$140,000	$136,000
Total Current Liabilities	$540,200	$481,600
Long-term Debt	$424,612	$323,432
Total Liabilities	$964,812	$805,032
Common Stock	$460,000	$460,000
Retained Earnings	$225,988	$203,768
Total Shareholder's Equity	$685,988	$663,768
Total Liabilities and Owner's Equity	$1,650,800	$1,468,800

Sting Inc
Statement of Cash Flows
For the Year Ended Dec. 31, 2009 ($ in 000's)
Cash Flows from Operations
Net Income	$44,220
Depreciation Expense	$20,000
Change in Accounts Receivable	$(50,800)
Change in Inventories	$(120,800)
Change in Accounts Payable	$29,600
Change in Other Current Liabilities	$4,000
Total Cash Flows from Operations		$(73,780)
Cash Flows from Investing
Change in Plant & Equipment	$(36,000)
Total Cash Flows from Investing		$(36,000)
Cash Flows from Financing
Change in Short-term Notes Payable	$25,000
Change in Long-term Debt	$101,180
Change in Common Stock	$-
Cash Dividends Paid to Shareholders	$(22,000)
Total Cash Flows from Financing		$104,180
Net Change in Cash Balance		$(5,600)