Question

Please help this is for a grade ! thank you!!

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. Your boss has asked you to calculate the profitability ratios of Gadget Twin Inc. and make comments on its second-year performance as compared to its first-year performance. The following shows Gadget Twin Inc.'s income statement for the last two years. The company had assets of $8,225 million in the first year and $13,157 million in the second year. Common equity was equal to $4,375 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. Gadget Twin Inc. Income Statement For the Year Ending on December 31 (Millions of dollars) Year 2 Year 1 Net Sales Operating costs except depreciation and amortization Depreciation and amortization Total Operating Costs Operating Income (or EBIT) 4,445 3,500 1,365 1,268 222140 1,587 1,408 2,858 2,092 386 167 2,472 1,925 989770 1,483 1,155 Less: Interest Earnings before taxes (EBT) Less: Taxes (40%) Net Income Calculate the profitability ratios of Gadget Twin Inc. in the following table. Convert all calculations to a percentage rounded to two decimal places.

Answer 1

rate positively ..

		Year 2	Year 1
	Net sales	4,445	3500
	Operating cost less depreciation	1,365	1,268
	Depreciation and amortization	222	140
	Total operating cost	1,587	1,408
	Operating income	2,858	2,092
	Less interest	386	167
	Earning before taxes	2,472	1,925
	Less taxes	989	770
	Net income	1,483	1,155
	Total asest	13,157	8,225
	Total equity	4,375	4,375
	Ratio	Year 2	Year 1
	Operating profit margin	64.30%	59.77%
	Net profit margin	33.36%	33.00%
	return on total asset	11.27%	14.04%
	return on common equity	33.90%	26.40%
	Basic earning power	21.72%	25.43%
	Correct answers are -
	Higher operating profit margin than the industry average indicate either lower operating costs, higher product pricing or both.
	If a company's operating margin increases but its profit margin decreases, it could mean that the company paid more in interest or taxes