1a. Using the information below, present the Income Statement and Balance Sheet for Lexon Enterprises.

• Sales for the year were $2,500,000.
• Gross Margin is 20%.
• Selling and Administrative expenses are 4% of sales.
• Depreciation expenses arise from the straight-line depreciation of equipment purchased three years ago for $1.5 million. The equipment has an expected life of ten years with no salvage value.
• Lexon has outstanding debt of $900,000 on which it pays interest of 10%.
• Lexon had cash of $40,000, inventory of $200,000, accounts receivable of $290,000, and accounts payable of $220,000 outstanding.
• The current tax rate faced by the company is 20%.
• The have been no changes in the ownership of the enterprise since 40,000 shares were originally issued two years ago at a price of $7.50 each. As of year-end last year, the enterprise had retained earnings of $32,000.

1b. Calculate the following ratios: current and quick ratios; inventory turnover and days sales in Receivables; fixed and total asset turnover; debt ratio; profit margin, ROA, ROE.

1c. Write out the relationships that comprise the extended Du Pont equation. Comment on your results given that Lexon Enterprises competes against Bluffard Enterprises and you have obtained the following data: ROE of 16%, PM of 6.9%, ratio of total assets to equity of 1.2.