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 Blur Corp. and make comments on its second year performance as compared to its first-year performance. The following shows Blur Corp.'s income statement for the last two years. The company had assets of $9,400 million in the first year and $15,037 million in the second year. Common equity was equal to $5,000 million in the first year, 100% of earnings were paid out as dividends in the first year, and the firm did not issue new stock in the second year. Blur Corp. Income Statement For the Year Ending on December 31 (Millions of dollars) Year 2 Year 1 Net Sales 5,080 4,000 1,365 1,268 operating costs except depreciation and amortization Depreciation and amortization 160 254 Total operating costs 1,619 1,428 Operating Income (or EBIT) 3,461 2,572 Less: Interest 346 Earnings before taxes (EBT) 3,115 2,302 Less: Taxes (40%) 1,246 921 1,869 1,381 Net Income