Green Earth Homes, Inc., builds environmentally sensitive structures. The companys 2012 revenues totaled $2,785 million. At December
Question:
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.
Step by Step Answer:
Financial accounting
ISBN: 978-0132751124
9th edition
Authors: Walter T. Harrison Jr., Charles T. Horngren, C. William Thom