Sally Perkins is an audit associate who has been assigned to interpret some data as part of the audit review process for Plunge Enterprises, a new audit client. Data available for the company are in the table below. $($NOTE: Year $3$ is the current year$)$:

Answer each of the questions in the space below with a brief explanation.

$1.$ Was the company using financial leverage to the advantage of the common stockholders in year $1?$

$2.$ Is it becoming easier for the company to pay its bills as they come due in year $3$ compared to year $1?$

$3.$ Are customers paying their bills at least as fast in year $3$ as in year $1?$

$4.$ What is the length of the company's operating cycle in year $3?$ In year $1?$

$5.$ Are there any red flags regarding recognition of revenue?

Year $3$ Year $2$ Year $1$

Current Ratio $2\mathrm{.}82\mathrm{.}52\mathrm{.}0$

Acid$-$test Ratio $0\mathrm{.}70\mathrm{.}91\mathrm{.}2$

Accounts Receivable Turnover $8\mathrm{.}69\mathrm{.}510\mathrm{.}4$

Inventory Tunover $5\mathrm{.}05\mathrm{.}76\mathrm{.}8$

Sales Trend $130\mathrm{.}0118\mathrm{.}0100\mathrm{.}0$

Return on Total Assets $13\mathrm{.}0\%11\mathrm{.}8\%10\mathrm{.}4\%$

Return on Equity $16\mathrm{.}2\%14\mathrm{.}5\%9\mathrm{.}0\%$