Eco Manor Structures Inc. builds environmentally sensitive structures. The company's 2021 revenues totaled
$2,760 million. At December 31, 2021, and 2020, the company had, respectively, $650 million and $600 million in
current assets. The December 31, 2021, and 2020, balance sheets and income statements reported the
following amounts:
At year end (in millions) 2021 2020
Liabilities and stockholders’ equity
Current liabilities
Accounts payables 118 196
Accrued Expenses 152 173
Accrued employee compensation
and benefits
67 34
Current portion of long-term debt 15 9
Total current liabilities 352 412
Long-term debt 1481 1309
Post-retirement benefits payable 19 7
Other liabilities 1800 1273
Total stockholders’ equity 3730 3085
Year-end (in millions)
Cost of goods sold 2699 2436
Describe each of Eco Manor Structures, Inc.'s liabilities and state how the liability arose.
Choose the correct liability from the list that best fits the description provided.
Long-term debt -The amount of long-term notes and bonds payable that the company expects to pay after the
coming year.
Other liabilities - A catch-all group of liabilities that do not fit one or more specific categories. This is usually listed
among the long-term liabilities.
Accounts payable - Amounts owed to suppliers for products or services that have been purchased on account.
Accrued employee compensation and benefits - Amounts owed to employees for salaries and other payroll-related
expenses.
Post-retirement benefit - Amounts owed for providing benefits to retirees such as health care costs.
Current portion of long-term debt – The next year's payments on the company's long-term debt.
Accrued expenses - Expenses that the company has incurred but not yet paid; these are liabilities for expenses such
as interest and income taxes.
Requirement 2. What were the company's total assets at December 31, 2021?
The total assets at December 31, 2021 were 3730 million.
Requirement 3. Assume that beginning and ending inventories for both periods did not differ by a
material amount. Accounts payable at the end of 2019 was $210 million. Calculate accounts payable
turnover as a ratio and days' payable outstanding (DPO) for 2020 and 2021. Calculate current ratios for
2020 and 2021 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.Determine the formula for the
accounts payable turnover. Then complete the formula and calculate the accounts payable turnover ratios
at the end of 2020 and 2021.
Purchases from suppliers (or CCOGS)/Average accounts Payable = accounts payable
2669/157=17
2436/203=12
365/Accounts playable turnover= days payable outstanding
365/17=21
365/12=30
1. Total current assets (Current assets = cash and equivalents + accounts
receivable + inventory + short-term investments + prepaid expenses
+ other liquid assets.
) / total current liabilities =current ratio
650/352=1.85
600/412=1.46
The company’s ability to cover accounts payable and current liabilities over the year improved.
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