EC is a public limited company producing electric cars. Market research suggests that electric cars are in the early stage of the product life cycle. The demand for electric cars is likely to increase substantially in the next 10 years. EC is based in country X, where it is one of three electric car manufacturers. However, other manufacturers could start to produce electric cars if the forecast market growth is correct. EC's promotion has only been aimed at high income groups. The government of country X recently announced that it will support the use of electric cars. This will help EC to achieve its objective to increase sales volume by 50% over the next two years. One year ago, EC invested $10m in new production facilities. The investment was funded by a long-term bank loan. Interest payments on the bank loan have reduced EC's profit margin from 9% to 4%. EC will need to cut unit costs through increased efficiency. EC initially launched its cars using a price skimming strategy but sales growth has been slow. If EC can achieve a 50% growth in sales over the next two years, it will be in a strong financial position. This means it will be able to spend more on the development of a larger product portfolio of electric cars. Jancie, the Finance Director, has produced forecasts for EC's financial data over the next two years, as shown in Table 2.1. Table 2.1: Extract from EC's forecast financial data | | 2020 ($m) | 2021 ($m) | |---| | Inventories | 30 | 50 | | Cash | 10 | 20 | | Trade receivables | 10 | 20 | | Trade payables | 25 | 30 | | Current ratio | 2 | X |