Green Earth Homes, Inc., builds environmentally sensitive structures. The companys 2012 revenues totaled $2,785 million. At December 31, 2012 and 2011, the company had $643

Green Earth Homes, Inc., builds environmentally sensitive structures. The company’s 2012 revenues totaled $2,785 million. At December 31, 2012 and 2011, the company had $643 million and $610 million in current assets, respectively. The December 31, 2012 and 2011 balance sheets and income statements reported the following amounts:

Requirements
1. Describe each of Green Earth Homes, Inc.’s liabilities and state how the liability arose.
2. What were the company’s total assets at December 31, 2012? Evaluate the company’s leverage and debt ratios at the end of 2011 and 2012. Did the company improve, deteriorate, or remain about the same over the year?
3. Accounts payable at the end of 2010 was $195. Calculate accounts payable turnover as a ratio and days payable outstanding (DPO) for 2011 and 2012. Calculate current ratios for 2011 and 2012 as well. Evaluate whether the company improved or deteriorated from the standpoint of ability to cover accounts payable and current liabilities over theyear.

At year-end (In millions) 2012 2011 Liabilities and stockholders' equity Current liabilities Accounts payable S 137 S 181 169 16 10 376 1,497 1,326 112 Accrued expenses 163 51 17 368 Employee compensation and benefits Current portion of long-term debt Total Current Liabilities Long-term debt Post-retirement benefits payable Other liabilities Stockholders' equity Total liabilities and stockholders' equity 138 20 2,027 $4,050 1.492 3,328 Year-end (in millions) Cost of goods sold $1,885 $2,196