Dernham Inc. Income Statement For the Year Ending on December 31 (Millions of dollars) Year 2 Year 1 Net Sales 3,175 2,500 Operating costs except depreciation and amortization 1,855 1,723 Depreciation and amortization 159 100 Total Operating Costs 2,014 1,823 Operating Income (or EBIT) 1,161 677 Less: Interest 157 71 Earnings before taxes (EBT) 1,004 606 Less: Taxes (25%) 251 152 Net Income 753 454 Calculate the profitability ratios of Dernham Inc. in the following table. Convert all calculations to a percentage rounded to two decimal places. Ratio Value Year 2 Year 1 27.08% 23.72% Operating margin Profit margin Return on total assets Return on common equity Basic earning power 7.73% 14.53% 12.35% Decision makers and analysts look deeply into 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. Identify which of the following statements are true about profitability 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 sales. 0 If a company's operating margin increases but its profit margin 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. 0 If a company issues new common shares but its net income does not increase, return on common equity will increase