Guinther & Sons,Inc -Read the Information for Guinther & Sons,Inc

Multiple Choice

Guinther & Sons,Inc. ,a retailer of men's clothing,earned a net profit of $77,000 for 2017.The balance sheet for Guinther & Sons includes the following items:

$$\begin{array} { l r l r } \text { Cash } & \$ 29,000 & \text { Accounts receivable } & \$ 39,000 \\\text { Inventory } & 79,000 & \text { Prepaid insurance } & 3,000 \\\text { Land } & 90,000 & \text { Accounts payable } & 21,000 \\\text { Taxes payable } & 29,000 & \text { Capital stock } & 50,000 \\\text { Retained earnings } & 97,000 & \text { Long-term notes payable } & 43,000\end{array}$$
-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 Guinther & Sons,Inc.nor its competitors is liquid.
D) Guinther & Sons,Inc.is more profitable than its competitors.