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. omments on its Your boss has asked yo second-year performanc the profitability ratios of Triptych Food Corp. and to its first-year performance. e The following shows Triptych Food Corp.'s income statement for the last two years. The company had assets of $7,050 million in the first year and $11,278 million in the second year. Common equity was equal to $3,750 million in the first year, and the company distributed 100% of its earnings out as dividends during the first and the second years. In addition, the firm did not issue new stock during either year. Triptych Food Corp. Income Statement For the Year Ending on December 31 (Millions of dollars) Year 3,000 Year 2 3,810 1,120 191 1,311 1,040 120 160 Net Sales Operating costs except depreciation and amortization Depreciation and amortization Total Operating costs Operating Income (or EBIT) Less: Interest Earnings before taxes (EBT) Less: Taxes (40%) Net Income ,840 2,499 250 1,693 search 147 Operating Income (or EBIT) Less: Interest Earnings before taxes (EBT) Less: Taxes. ) Net Inc 2,499 1,840 250 2,249 1,693 900 677 1,3491,016 TED talog fers Calculate the profitability ratios of Triptych Food Corp. in the following table. Convert all calculations to a percentage rounded to two decimal places. -ns Ratio Value ccess Year 2 Year 1 ter 61.33% 35.41% Operating margin Profit margin Return on total assets Return on common equity Basic earning power 14.41% 27.09% ack 22.16% 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. A higher operating margin than the industry average indicates either lower operating costs, higher product pricing, or both. An increase in the return on assets ratio implies an increase in the assets a firm owns. If a company's operating margin increases but its profit margin decreases, it could mean that the company paid more in interest or taxes. If a company issues new common shares but its net income does not increase, return on common equity will increase e here to search DELL Cute Camel Woodcraft Company just reported earnings after tax (also called net income) of $9,750,000, and a current stock price of $28.50 per share. The company is forecasting an increase of 25% for its after-tax income next year, but it also expects it will b e to issue 2,900,000 new shares of stock (raising its shares outstanding from 5,500,000 to 8,400,000) If Cute Camel's forecast tumhe to be correct and its price to earnings (P/E) ratio does not change, what does the company's management expect its stock price to be one year from now? (Note: Round any EPS calculations to two decimal places, and round any P/E ratio calculation to four decimal places.) $23.35 per share O $28.50 per share $17.51 per share O $29.19 per share One year later, Cute Camel's Shares are trading at $52.08 per share, and the company reports the value of its total common equity as $39,228,000. Given this information, Cute Camel's market-to-book (M/B) ratio is is it possible for a company to exhibit a negative EPS and thus a negative P/E ratio? ONO Yes Which of the following statements is true about market value ratios? O Low P/E ratios could mean that the company has a great deal of uncertainty in its future earnings. High P/E ratios could mean that the company has a great deal of uncertainty in its future earnings f/servlet/quiz quiz action takeQuiz& quiz probGuidQNAPCOABOT010000005373461000D vsuf.00108lckem 1582423122839. DAAAG search