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Dernham Inc. Income Statement For the Year Ending on December 31 (Millions of dollars) Year 2 Year 1 Net Sales 4,445 3,500 Operating costs

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Dernham Inc. Income Statement For the Year Ending on December 31 (Millions of dollars) Year 2 Year 1 Net Sales 4,445 3,500 Operating costs except depreciation and amortization 1,855 1,723 Depreciation and amortization 222 140 Total Operating Costs 2,077 1,863 Operating Income (or EBIT) 2,368 1,637 Less: Interest 237 213 Earnings before taxes (EBT) 2,131 1,424 Less: Taxes (40%) 852 570 Net Income 1,279 854 Calculate the profitability ratios of Dernham Inc. in the following table. Convert all calculations to a percentage rounded to two decimal places. Value Ratio Operating margin Net profit margin Year 2 Year 1 53.27% 46.77% 28.77% 24.40% Return on total assets 10.38% Return on common equity 35.95% 19.52% Basic earning power 18.00%

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