For fiscal year 2011, Peets Coffee and Tea (PEET) had a net profit margin of 4.78%, asset

Question:

For fiscal year 2011, Peet’s Coffee and Tea (PEET) had a net profit margin of 4.78%, of 1.73, and a book equity multiplier of 1.21.
a. Use this data to compute Peet’s’ ROE using the DuPont Identity.
b. If Peet’s managers wanted to increase its ROE by one percentage point, how much higher would their need to be?
c. If Peet’s net profit margin fell by one percentage point, by how much would their need to increase to maintain their ROE?

Asset Turnover
Asset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio.