Profitability ratios help in the analysis of the combined Impact of liquidity ratios, asset management ratios, and debt management ratios on the operating performance of a firm. Your boss has asked you to calculate the profitability ratios of Chilly Moose Fruit Producer and make comments on its second-year performance as compared to its first-year performance. The following shows Chilly Moose Prule's income statement for the last two years. The company had assets of $3,525 million in the first year and $5,639 million in the second year. Common equity was equal to $1,875 million in the first year, and the company distributed 100% of its camings out as dividends during the first and the second years. In addition, the firm did not issur new stock during either year. Chilly Moose Fruit Producer Income Statement For the Year Ending on December 31 (Millions of dollars) Year 2 Year Net Sales 1,90 1,500 Operating costs compt depreciation and amortization 1,610 1,495 Depreciation and amortization 60 Total Operating costs 1,555 Operating Income (or EBIT) 200 Less Interest 20 7 Earnings before taxes (ET) 180 Less: Taxes (40%) ary 72 Net Income 100 - Calculate the profitability ratios of Chilly Moose Fruit Producer in the following table. Convert all calculations to a percentage rounded to two decimal places Ratio Value Year 2 Year 1 5.67% Operating profit margin Net profit margin Return on total assets Return on common equity Basic earning power -0.82% -1.55% 3.55% 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 profitabilty ratios. Check all that apply. If a company has a net profit margin of 10%, it means that the company earned a net income of $0.10 for each dollar of sales. 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 net profit margin is increasing If a company issues new common shares but its net income does not increase, return on common equity will increase