5. Profitability ratios Profitability ratios help in the analysis of the combined impact of liquidity ratios, asset management ratios, and debt management ratios on the operating performance of a firm. Your boss has asked you to calculate the profitability ratios of Triptych Food Corp. and make comments on its second-year performance as compared with its first-year performance. The following shows Triptych Food Corp.'s income statement for the last two years. The company had assets of $4,700 million in the first year and $7,518 million in the second year. Common equity was equal to $2,500 million in the first year, and the company distributed 100% of its earnings ou as dividends during the first and the second years. In addition, the firm did not issue new stock during either year. Triptych Food Corp. Income Statement For the Year Ending on December 31 (Millions of dollars) Year 2 Year 1 Net Sales 2,540 2,000 Operating costs except depreciation and amortization 1,120 1,040 Depreciation and amortization 127 80 Total Operating Costs 1,247 1,120 Operating Income (or EBIT) 1,293 880 Less: Interest 175 114 Earnings before taxes (EBT) 1,118 766 Less: Taxes (25%) 280 192 Net Income 838 574 x