Question: Good Earth Homes Inc builds environmentally sensitive structures The company s

Good Earth Homes, Inc., builds environmentally sensitive structures. The company’s 2014 revenues totaled $2,785 million. At December 31, 2014 and 2013, the company had, respectively, $638 million and $604 million in current assets. The December 31, 2014 and 2013, balance sheets and income statements reported the following amounts:

1. Describe each of Good Earth Homes, Inc.’s liabilities and state how the liability arose.
2. What were the company’s total assets at December 31, 2014? Evaluate the company’s leverage and debt ratios at the end of 2013 and 2014. Did the company improve, deteriorate, or remain about the same over the year?
3. Assume that beginning and ending inventories for both periods did not differ by a material amount. Accounts payable at the end of 2012 was $195. Calculate accounts payable turnover as a ratio and days’ payable outstanding (DPO) for 2013 and 2014. Calculate current ratios for 2013 and 2014 as well. Evaluate whether the company improved or deteriorated from the standpoint of ability to cover accounts payable and current liabilities over theyear.
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  • CreatedJuly 25, 2014
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