Balance Sheet: Liabilities and Stockholders’ Equity
The balance sheet provides creditors, investors, and analysts with information on company resources (assets) and its sources of capital (its equity and liabilities). It normally also provides information about the future earnings capacity of a company assets as well as an indication of cash flows that may come from receivables and inventories.
Liabilities represents obligations of a company arising from past events, the settlement of which is expected to result in an outflow of economic benefits from the entity.
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- Income Statement
- Common-Size Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Solvency Ratios
- Common Stock Valuation Ratios
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Total Asset Turnover since 2005
- Analysis of Revenues
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Builders FirstSource Inc., consolidated balance sheet: liabilities and stockholders’ equity
US$ in thousands
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
The financial data reveals notable trends and shifts in various liability and equity accounts over the five-year period ending December 31, 2022.
- Current Liabilities
- Current liabilities exhibited a strong upward trend from 2018 through 2021, nearly tripling from approximately $731 million to over $2.1 billion. However, in 2022, current liabilities decreased to about $1.84 billion. This fluctuation was primarily driven by a significant increase in accounts payable, which soared from $423 million in 2018 to a peak of over $1.09 billion in 2021, before declining to approximately $803 million in 2022. Similarly, accrued payroll and related expenses more than doubled between 2018 and 2022, increasing from $145 million to over $400 million. Other components, such as self-insurance reserves and accrued business taxes, also experienced growth but at more moderate rates.
- Lease Liabilities
- Operating lease liabilities increased significantly following 2018, with both current and noncurrent portions rising steadily. Current portion of operating lease liabilities appeared starting in 2019 and grew gradually each year to about $101 million in 2022. Noncurrent lease liabilities followed a similar trajectory, increasing from approximately $237 million in 2019 to over $404 million by 2022.
- Long-term Debt
- Long-term debt, net of current maturities, showed a marked increase from $1.55 billion in 2018 to nearly $3 billion by 2022, more than doubling over the period. Notable spikes occurred between 2020 and 2021, coinciding with substantial overall growth in long-term liabilities.
- Total Liabilities
- Total liabilities more than doubled from about $2.34 billion in 2018 to over $5.6 billion in 2022. The largest jump happened between 2020 and 2021, reflecting a jump in long-term liabilities and accrued liabilities.
- Accrued Liabilities
- Accrued liabilities increased significantly, from $250 million in 2018 to $739 million in 2022, indicating rising obligations likely linked to payroll, taxes, and other operational expenses. The sharp increase between 2020 and 2021 warrants particular attention.
- Stockholders’ Equity
- Stockholders’ equity demonstrated substantial growth overall, from approximately $596 million in 2018 to nearly $5 billion in 2022. There was a dramatic increase between 2020 and 2021, when equity jumped from about $1.15 billion to $4.8 billion, potentially due to additional paid-in capital, which also surged markedly in 2021 and remained elevated in 2022.
- Additional Paid-in Capital
- The additional paid-in capital account saw moderate increases from 2018 through 2020, rising from $560 million to nearly $590 million. A very significant increase occurred in 2021, reaching roughly $4.26 billion and remaining steady into 2022, which played a major role in the equity expansion.
- Retained Earnings
- Retained earnings showed consistent growth over the five-year period, from around $35 million in 2018 to over $700 million in 2022, reflecting ongoing profitability and earnings retention. A slight decrease was observed between 2020 and 2021, but it recovered strongly by 2022.
- Other Observations
- Contract liabilities increased sharply between 2020 and 2021, more than tripling, then decreased slightly in 2022. Deferred income taxes showed variability, rising substantially in 2021 before declining in 2022. Several other accrued liabilities, such as accrued rebates payable and accrued interest, exhibited gradual increases over the period.
Overall, the data indicate a company that has significantly expanded its balance sheet size in recent years, particularly through increased liabilities and additional capital injections. The rapid growth in long-term debt and accrued liabilities between 2020 and 2021 drove much of this expansion, while stockholders’ equity grew substantially due to increased paid-in capital and retained earnings. The patterns suggest considerable financing activities and potentially strategic investments or acquisitions during the 2020–2021 timeframe. Management should continue monitoring liquidity indicators given the large current liabilities and ensure sustainable leverage levels.