The TechOne Company was established in the Spring of 2015. During the first couple of years, the company experienced a rapid increase in its sales. Despite good profits, the company had experienced a shortage in cash and had found it necessary to increase its borrowing from the bank in the following year (2016). The maximum loan that the bank would extend to the owner Mr. Company was $200,000. In addition, the bank did not ask the company to secure the debt with its real property. Mr. Company, sole owner and president of the TechOne Company was therefore asking his VP of Finance to perform a financial analysis to understand whether the shortage of cash was due to money tied up in its inventory or was it due to cash tied up elsewhere.

1. Please provide a summary on the state of the economy per the information provided in the case.