The table below gives information extracted from the annual financial statements of Management plc for the past year. Management plc - Extracts from annual accounts Inventories: raw materials P108,000 Work in progress P75,600 finished goods P 86,400 Purchases of raw materials P518,400 Cost of production P675,000 Cost of goods sold P756,000 Sales P864,000 Receivables P172,800 Payables P 86,400

a. Calculate the length of the operating cycle (assuming 365 days in the year).

b. Highlight four problems with the use of financial ratios as a measure of performance measurement for an organization.