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 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, 2018? Evaluate the company’s leverage and debt ratios at the end of 2017 and 2018. 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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A1 1 At year-end (In millions) 2 Liabilities and stockholders' equity 3 Current liabilities Accounts payable Accrued expenses Employee compensation and benefits Current portion of long-term debt Total current liabilities 9 Long-term bonds payable 10 Deferred income taxes payable 11 Leases payable 12 Common stockholders' equity 13 Total liabilities and stockholders' equity Year-end (in millions) 15 Cost of goods sold 16 2017 2018 $ 174 167 $ 110 149 37 12 308 1,578 16 361 1,324 125 19 129 18 2,420 $ 4453 1,273 $ 3,102 14 $ 1,704 $ 1,239