Zulu is a retailer of high fashion women’s clothing. Zulu has experienced modest sales growth over the past three years but has had difficulty translating the expansion of sales into improved profitability. Using three years’ financial statements, you have developed the following ratio calculations and industry comparisons.

				Industry Averages
	2018	2019	2020	2020
Current ratio	1.71X	1.65X	1.53X	1.7X
Quick ratio	.92X	.89X	.84X	.95X
Average collection period	60 days	60 days	67 days	65 days
Inventory turnover	4.2X	3.9X	3.69X	4.5X
Fixed asset turnover	3.2X	3.33X	3.57X	3.0X
Total asset turnover	1.4X	1.35X	1.31X	1.37X
Debt ratio	59.2%	61%	76.4%	60%
Times interest earned	4.2X	3.7X	2.78X	4.75X
Gross profit margin	25%	23%	20%	22.5%
Operating profit margin	12.5%	12.7%	13.3%	12.5%
Net profit margin	6.1%	6.0%	5.1%	6.5%
Return on total assets	8.54%	8.1%	6.7%	8.91%
Return on equity	20.93%	20.74%	28.4%	22.28%

Show the breakout of the 2020 return on equity (3-factor DuPont Identity) for both Lulu and the industry.

Based on the above breakout, in conjunction with any other ratios given, explain what major issues are contributing to Tinkerbell’s declining profitability.