You have taken the following information from a firm's financial statements. As an investor in the firm's debt instruments, you are concerned with its liquidity position and its use of financial leverage. What conclusions can you draw from thisinformation?

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2007 2006 2005 Sales Cash Accounts receivable Inventory Current liabilities Operating income Interest expense Taxes Net income Debt Equity $1,700,000 ,00,000 $1,000,000 5,000 125,000 200,000 175,000 90,000 20,000 25,000 45,000 200,000 200,000 18,000 152,000 200,000 225,000 170,000 27,000 53,000 90,000 260,000 330,000 7000 130,000 190,000 210,000 145,000 23,000 45,000 77000 250,000 300,000