| 33. Guinther & Sons, Inc. Guinther & Sons, Inc. a retailer of men's clothing, earned a net profit of $77,000 for 2014. The balance sheet for Guinther & Sons includes the following items: Cash $29,000 Accounts receivable $39,000 Inventory 79,000 Prepaid insurance $ 3,000 Land 90,000 Accounts payable $21,000 Taxes payable 29,000 Capital stock $50,000 Retained earnings 97,000 Long-term notes payable $43,000 Read the information for Guinther & Sons, Inc. The average current ratio for stores such as Guinther & Sons is 2.4 to 1. What does this comparison tell you about its liquidity? A. It is more liquid than its competitors B. It has more long-term assets than its competitors C. Since a rule of thumb for current ratios is 2 to 1, neither Nadia & Sisters nor its competitors is liquid. D. Nadia & Sisters is more profitable than its competitors. | |
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