Being a prudent investor, Sally Perkins always investigates a company thoroughly before purchasing shares of its stock for investment. Ms. Perkins is interested in the common stock of Plunge Enterprises. The following data are available for the company:

	Year 3	Year 2	Year 1
Current ratio	2.8	2.5	2.0
Acid-test ratio	0.7	0.9	1.2
Accounts receivable turnover	8.6	9.5	10.4
Inventory turnover	5.0	5.7	6.8
Sales trend	130.0	118.0	100.0
Dividends paid per share*	$2.50	$2.50	$2.50
Dividend yield ratio	5 %	4 %	3 %
Dividend payout ratio	40 %	50 %	60 %
Return on total assets	13.0 %	11.8 %	10.4 %
Return on common stockholders' equity	16.2 %	14.5 %	9.0 %

*There were no changes in common stock outstanding over the three-year period.

Ms. Perkins would like answers to a number of questions about the trend of events over the last three years in Plunge Enterprises. Her questions are as follows:

Required:

Answer each of Ms. Perkins's questions.

a.

Is the market price of the companys stock going up or down?

	Going up
	Going down

b.

Is the earnings per share increasing or decreasing?

	Increasing
	Decreasing

c.

Is the price-earnings ratio going up or down?

	Going up
	Going down

d.	Is the company employing financial leverage to the advantage of the common stockholders?

Year 1

Year 2

Year 3

e.

Is it becoming easier for the company to pay its bills as they come due?

	Yes
	No

f.

Are customers paying their bills at least as fast now as they did in Year 1?

	Yes
	No

g.

Is the total of the accounts receivable increasing, decreasing, or remaining constant?

	Increasing
	Decreasing
	Remaining constant

h.

Is the level of inventory increasing, decreasing, or remaining constant?

	Increasing
	Decreasing
	Remaining constant