AB Limited (ABL) is a private company in Ontario that sells mugs, jars, and bottles in a variety of colours, sizes, and materials. ABL has been owned by four equal owners since its inception. The owners have different skillscreative design, marketing, finance, and information systems. The company attributes much of its success to the use of materials that can be easily shipped without breaking, and unique designs that appeal to a variety of buyers, particularly commercial buyers who purchase for restaurants, or for businesses who choose to advertise their business by giving away or selling regular or travel mugs. The owners meet formally every month and have informal meetings two or three times per week to discuss particular clients or new approaches. About a quarter of the company's sales are completed via the company's secure website, while the remainder are by telephone or purchase order. ABL works with distributors of kitchenware, selling wholesale to hundreds of outlets in Canada. Most of these sales are done over the phone, although a salesperson does spend some time in major cities across the country visiting some of the large customers and helping with shelf layout and marketing to the ultimate consumers for larger distributors. These efforts have resulted in gradually increasing market share for the company. All sales are recorded in the accounting software package used by the company. The accounting manager reports directly to one of the owners, and there are two other employees in the accounting department. Password controls are used to limit functions that are accessible by employees. For example, only the controller can implement wage rate increases or product price increases (which are reviewed and approved by the owner responsible for marketing). Two owners are required to sign cheques, and do so with source documents attached. Similarly, two owners are required to approve new employees. All manufacturing is outsourced to local producers who work with different materials. For example, a different supplier handles steel mugs versus plastics or glass. Ceramics are rarely used as they are quite breakable, whereas some forms of glass are very durable. ABL does not hold any inventory, as manufacturing is all done to order. However, as there have been some collection problems from customers, the company has had to go to the maximum of its line of credit and has no additional borrowing capacity available. It is waiting for the results of the audited financial statements to approach its bank for an increase in its line of credit. Internet sales are prepared (via credit card), while sales to distributors are net 30 days. The company has an April year end. Following are extracts from the annual financial statements.

	2020	2019	2018
Cash	$99 000	$110 000	$124 000
Accounts receivable	$320 000	$220 000	$150 000
Fixed assets (net)	$15 000	$20 000	$25 000
Accounts payable	$270 000	$180 000	$150 000
Bank indebtedness	$100 000	$25 000	$0
Share capital	$200 000	$200 000	$200 000
Revenue	$625 310	$538 120	$507 380
Cost of sales	$406 452	$333 634	$304 428
Administration expenses	$89 000	$57 000	$58 000
Sales expenses	$31 266	$21 525	$20 295
Amortization	$5 000	$5 000	$5 000

Perform a basic ratio analysis for this company to determine audit risk and then, based on your analysis and the information in the case, discuss the audit risk (with reasons) you would assign to this company.