5. Profitabuinty natios Probitability tatios help in the analysis of the comined impact of fiquidity ratios, asset manageinent ratios, and debt management ratios on the operating performance of a firm. Your boss has asked you to calculate the profitatility rabos of St. Mestanky Beer Co. and male commients on its secend- year performance as coenpired with its finst year performance. The following shows 5t. MCStanky Beer Co,s income statement for the last two years. The company had assets of $7,050 million in the first year and $11,278 million in the second yeac, Common equity was equal to $3,750 million in the first year, and the compamy distributed 100 \% of its earnings out as dividends during the first and the second yeark. In addition, the finm did not issue new stock during either year. St. McStanky Beer Co. Income Statement For the Year Ending on December 31 (Mullions of dollars) Caloulate the profitability ratios of St. Mestanky Beer Co. in the followng table. Convert all calculations to a percentage rounded to two decimal places. Decision makers and analysts look deeply anto profitability ratios to identify trends in a company's profitability. Profitability ratios give insights into both the survivability of a company and the benefits that shareholders receive. fdentify which of the following statements are true about profitabality ratios. Check all that apply. If a company has a profit margin of 10%, it means that the company earned a net income of $0.10 for each dollar of soles. If a company's operating margin increases but its profit marbin decreases, it could mean that the company paid more in interest or taxes. An increase in a company's earnings means that the profit margin is increasing. If a company issues new common shares but its net income does not increase, return on common equity will increase