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The toy industry holds a substantial market share within the childrens entertainment segment Major companies in this industry includes Mattel Hasbro Leapfrog Jakks Pacific and Kids brand Mattel and Hasbro are the dominant companies in this industry in which they accounted for 54 of the sales in the US in 2012 From 2004 to 2007 the industry grew 2221 However with the recent global economic downturn 2008 to 2012 saw a meager 82 growth With a more optimistic economic climate and increasing discretionary income the growth outlook for the industry is very positive While industry sales are expected to increase drastically the major players in this industry cannot become complacent More innovative companies like Leapfrog have been trying to keep up with those traditional toy companies The performance and strategies of those companies will determine the future flow of the industry The evaluation is based on three main aspects including profitability efficiency and liquidity Operating performance of the firm is the most important determinant of analyzing the financial situation of the firm From the profitability perspective Leapfrog has the best performance among the companies in the industry First of all the net profit margin aka return on sale for Leapfrog is 15 The net profit margin measures how effective a company is at cost control A higher net profit margin indicates better control over its costs The average net profit margin in this industry is only 9 The net profit margin is lower than most of the other industries because toys are not a necessity so customers can opt not to purchase unless the price is acceptable Mattel is the second best company in the net profit margin in the industry which is 12 Secondly the return on asset for Leapfrog is 2016 Return on asset is an indicator that measures the profitability given the efficiency of asset management The average return of asset in the industry is only 868 which is 14 percent point
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