The sales director thinks that if the price of the product is at Rs 42, the sales will rise to 400 units per month. The production manager argues that if the price goes to Rs 30, sales will increase to 600 units per month. The supply chain manager proposes to buy from a foreign supplier at Rs 35 per unit and sell at the current market price. Direct labour and raw material cost Rs 15 and Rs 20 per unit. Selling and distribution costs are Rs 300. The current market price is at Rs 40. Fixed costs are at Rs 600. a. Determine what is the best option. Discuss on the relevance of proper inventory management. [8 marks] [12 marks] b. Question 3 [20 Marks The financial performance of the company for the financial year 2017 and 2016 is estimated as follows: Ratios Current ratio Inventory Turnover ratio Days sales outstanding Total debt to total assets ratio Times earned interest Profit margin on sales Return on Assets Price/earnings ratio 2016 2017 0.94 0.98 2.30 2.06 70.74 67.78 0.79 0.69 39.69 38.08 0.32 0.34 0.05 0.04 9.42 6.30 a. Comment on the performance of the company. [12 marks] b. Discuss on the limitation of ratio analysis [8 marks)