Your boss has asked you to calculate the profitability ratios of Dernham Inc. and make comments on its second-year performance as compared with its first-year performance. The following shows Dernham 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. Dernham 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 1,610 1,495 Depreciation and amortization 127 80 Total Operating Costs 1,737 1,575 Operating Income (or EBIT) 803 425 Less: Interest 80 55 Earnings before taxes (EBT) 723 370 Less: Taxes (25%) 181 93 Net Income 542 277 Calculate the profitability ratios of Dernham Inc. in the following table. Convert all calculations to a percentage rounded to two decimal places. Ratio Value Year 2 Year 1 21.25% Operating margin Profit margin 21.34% Return on total assets 5.89% Return on common equity 11.08% Basic earning power 10.68%