Decision makers and analysts look deeply into profitability ratios to identify trends in a companys profitability. Profitability ratios give insights into both the survivability of a company and the benefits that shareholders receive. Identify which of the following statements are true about profitability ratios. Check all that apply.

1. 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 sales.
2. If a companys operating margin increases but its profit margin decreases, it could mean that the company paid more in interest or taxes.
3. An increase in a companys earnings means that the profit margin is increasing.
4. If a company issues new common shares but its net