Your boss has asked you to calculate the profitability ratios of Blue Sky Drone Company and make comments on its second-year performance as compared to its first-year performance. The following shows Blue Sky Drone'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. Blue Sky Drone Company Income Statement For the Year Ending on December 31 (Millions of dollars) Year 2 2,540 1,855 127 1,982 Year 1 2,000 1,723 80 1,803 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 558 197 75 181 483 193 290 Calculate the profitability ratios of Blue Sky Drone Company in the following table. Convert all calculations to percentage rounded to two decimal places. Ratio Value Year 2 Year 1 9.85% 11.42% Operating profit margin Net profit margin Return on total assets Return on common equity Basic earning power 2.32% 4.36% 7.42% 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. An increase in a company's earnings means that the net profit margin is increasing. 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