Green Earth Homes, Inc., builds environmentally sensitive structures. The company’s 2021 revenues totaled $2,770 million. At December 31, 2021 and 2020, the company had, respectively, $663 million and $613 million in current assets. The company’s balance sheets and income statements reported the following amounts: 

Requirements

1. Describe each of Green Earth’s long-term liabilities and state how the liability arose.

2. What were the company’s total assets at December 31, 2021? Evaluate the company’s leverage and debt ratios at the end of 2020 and 2021. Use year-end figures in place of averages where needed for calculating the ratios in this exercise. Did the company improve, deteriorate, or remain about the same over the year?

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1 At year-end (In millions) 2 Liabilities and stockholders' equity Current liabilities 3 4 A1 682 5 6 Employee compensation and benefits 7 Current portion of long-term debt Total current liabilities 9 Long-term bonds payable 10 Deferred income taxes payable 11 Leases payable Accounts payable Accrued expenses 15 16 12 Common stockholders' equity 13 Total liabilities and stockholders' equity 14 Year-end (in millions) Cost of goods sold B 2021 $ 110 149 37 12 308 1,578 129 18 2,420 $4,453 $ 1,704 2020 $ 174 167 16 4 361 1,324 125 19 1,273 $3,102 $ 1,239