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The following shows Diusitech Inc.'s income statement for the last two years. The company had assets of $4,700 million in the first year and
The following shows Diusitech Inc.'s income statement for the last two years. The company had assets of $4,700 million in the first year and $7,518 million in the second year. Common equity was equal to $2,500 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. Diusitech Inc. Income Statement For the Year Ending on December 31 (Millions of dollars) Year 2 Year 1 Net Sales 2,540 2,000 Operating costs except depreciation and amortization 1,120 1,040 Depreciation and amortization 127 80 Total Operating Costs 1,247 1,120 Operating Income (or EBIT) 1,293 880 Less: Interest 175 114 Earnings before taxes (EBT) 1,118 766 Less: Taxes (25%) 280 192 Net Income: 838 574 Calculate the profitability ratios of Diusitech Inc. in the following table. Convert all calculations to a percentage rounded to two decimal places. Ratio Value Year 2 Year 1 Operating margin 44.00% Profit margin 32.99% Return on total assets 12.21% Return on common equity 22.96% Basic earning power 17.20%
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