Janet has been asked to calculate the profitability ratios of Blue Hamster Manufacturing, Inc. and make comments on its second-year performance as compared to its first-year performance. The following shows Blue Hamster's income statement for the last two years. The company had assets of $4,700,000 in the first year and $7,518,400 in the second year. Common equity was equal to $2,500,000 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. Blue Hamster Manufacturing, Inc. Income Statements Years Ending December 31 Net Sales Operating costs less depreciation and amortization Depreciation and amortization Total Operating Costs Operating Income Interest Earnings before taxes Taxes (40%) Net Income Year Year 2 Year 1 $2,540,000 $2,000,000 1,855,000 1,722,500 127,000 80,000 $1,982,000 $1,802,500 $558,000 $197,500 75,330 20,738 $482,670 193,068 $289,602 $176,762 70,705 $106,057 Given the income statements, calculate the profitability ratios of Blue Hamster Manufacturing, Inc. Profitability Ratio Operating profit margin Net profit margin Return on total assets Return on common equity Year 2 11.40% Value Year 1 9.88% FAVO,057 2.26% 4.24% Which of the following statements are true about profitability ratios? Check all that apply. A higher operating profit margin than the industry average indicates either lower operating costs, higher product pricing, or both. 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 the return on assets ratio implies an increase in the assets a firm owns. If a company issues new common shares but its net income does not increase, return on common equity will increase