Green Earth Homes, Inc., builds environmentally sensitive structures. The company’s 2018 revenues totaled $2,770 million. At December 31, 2018, and 2017, the company had, respectively, $663 million and $613 million in current assets. The December 31, 2018, and 2017, 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, 2018?

3. Assume that beginning and ending inventories for both periods did not differ by a material amount. Accounts payable at the end of 2016 was $180 million. Calculate accounts payable turnover as a ratio and days’ payable outstanding (DPO) for 2017 and 2018. Calculate current ratios for 2017 and 2018 as well. Evaluate whether the company improved or deteriorated from the standpoint of its ability to cover accounts payable and current liabilities over the year.

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A1 1 At year-end (In millions) 2 Liabilities and stockholders' equity 3 Current liabilities Accounts payable 2018 2017 $ 110 149 37 12 $ 174 167 16 4 Accrued expenses 5 Accrued employee compensation and benefits Current portion of long-term debt 6. Total current liabilities 308 361 9 Long-term debt 10 Post-retirement benefits payable 11 Other liabilities 12 Total stockholders' equity 13 Total liabilities and stockholders' equity 14 1,578 129 18 2,420 $ 4,453 1,324 125 19 1,273 $ 3,102 Year-end (in millions) 15 Cost of goods sold $ 1,704 $ 1,239 16