Your boss has asked you to calculate the profitability ratios of Cold Goose Metal Works, Inc. and make comments on its second-year performance as compared to its first-year performance. The following shows Cold Goose'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. Cold Goose Metal Works, Inc. Income Statement For the Year Ending December 31 Net Sales Operating costs less depreciation and amortization Depreciation and amortization Total Operating costs Year 2 $2,540,000 1,365,000 $127,000 1,492,000 Year 1 $2,000,000 1,267,500 $80,000 1,347,500 $652,500 Operating Income (or EBIT) Less: Interest $1,048,000 104,800 84,825 Earnings before taxes (EBT) Less: Taxes (40%) $943,200 377,280 $567,675 227,070 Net Income $565,920 $340,605 Calculate the profitability ratios of Cold Goose Metal Works, Inc. in the following table. Convert all calculations to a percentage rounded to two decimal places. Ratio Value Year 2 Year 1 Operating profit margin 32.63% Net profit margin 22.28% Return on total assets 7.25% Return on common equity 13.62% 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 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