At year-end (In millions)	2021	2020
	Liabilities and stockholders' equity
	Current liabilities
	Accounts payable	$126	$190
	Accrued expenses	150	173
	Employee compensation and benefits	67	18
	Current portion of long-term debt	20	17
	Total current liabilities	363	398
	Long-term bonds payable	1,495	1,326
	Deferred income taxes payable	89	128
	Leases payable	19	27
	Common stockholders' equity	2,179	1,782
	Total liabilities and stockholders' equity	$4,145	$3,661
	Year-end (in millions)
	Cost of goods sold	$2,686	$1,896

Friendly Planet,

Inc., builds environmentally sensitive structures. The company's

2021

revenues totaled

$2,785

million. At December 31,

2021,

and

2020,

the company had, respectively,

$647

million and

$577

million in current assets. The company's balance sheets and income statements reported the following amounts:

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.

Requirement 1. Describe each of

Friendly Planet's

long-term liabilities and state how the liability arose.

Choose the correct liability from the list that best fits the description provided.

The amount that the company expects to pay after the coming year; the result from the company borrowing money.

Accounts payable

Accrued expenses

Current portion of long-term debt

Deferred income taxes payable

Employee compensation and benefits

Leases payable

Long-term bonds payable

The result of timing differences between GAAP and tax accounting methods (such as depreciation). Income tax expense might differ between GAAP book income ("Income Tax Expense") and taxable income according to Internal Revenue regulations ("Income Tax Payable").

Accounts payable

Accrued expenses

Current portion of long-term debt

Deferred income taxes payable

Employee compensation and benefits

Leases payable

Long-term bonds payable

The result from a company entering into long-term leases, such as for leasing property and equipment. The account includes both operating and finance leases that last longer than 12 months, and reflects the obligation for future lease payments.Requirement 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?What were the company's total assets at December 31,

2021?

The total assets at December 31, 2021 were

million.

Evaluate the company's leverage and debt ratio at the end of

2020

and

2021.

Did the company improve, deteriorate, or remain about the same over the year?Begin by computing the ratios. Determine the formula for the debt ratio. Then complete the formula and calculate the debt ratios at the end of

2020

and

2021.

(Enter amounts in millions. Round your answers to two decimal places.)

=

Debt ratio

2021

=

2020

=

Now determine the formula for the leverage ratio. Then complete the formula and calculate the leverage ratios at the end of

2020

and

2021.

(Enter amounts in millions. Round your answers to two decimal places.)

=

Leverage ratio

2021

=

2020

=

Did the company improve, deteriorate, or remain about the same over the year?

Both the leverage ratio and debt ratio

deteriorated

improved

remained about the same

in

2021.

The company

deteriorated

improved

remained about the same

over the year.