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Compute the following ratios for 2006, 2005 and 2004: Net profit margin Asset turnover Financial leverage Return on equity Write a short essay explaining what

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Compute the following ratios for 2006, 2005 and 2004: Net profit margin Asset turnover Financial leverage Return on equity Write a short essay explaining what has happened to the return on equity for Discount Toys and discuss the causes of changes in the ratio for the three years in terms of the impact the other ratios you have calculated (the DuPont model). In answering, consider the following questions: Has ROE increased or decreased and what does that suggest about the financial performance over these three years? How much has ROE changed and what explains the change in ROE over this period? Are they more or less profitable, are they using assets more or less efficiently (asset turnover), and are they using a higher relative level of debt? Do these changes explain the change in ROE from 2005 to 2006

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