1) It is said that ratio analysis doesnt give answers, it helps you ask the right questions. Explain the rationale behind this statement as it relates to a company undergoing a decline in its acid test ratio while at the same time maintaining a stable current ratio.

2)Multi Tools has been expanding its operation for the past two years. The firms sales have grown rapidly as a result of the expansion. However, this is a privately listed company, their available source of financing is line of credit provided by KF Commercial. The company needs to expand its inventory wishes to maintain their current ratio at 3X. If the current assets is at RM6million and current ratio is at 4X. How much must they invest in inventories and maintain their targeted current ratio?