drop down option 1= 93.5%, 73.50%, 88.20%, 55.63%

option 2= 37.94%, 50.41%, 51.22%, 29.87%

option 3= 13.41%, 21.45%, 10.09%, 15.42%

option4= 40.33%, 35.89%, 49.61%, 30.25%

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. Consider the following scenario: Your boss has asked you to calculate the profitability ratios of Green Caterpillar Garden Supplies, Inc. and make comments on its second-year performance as compared to its first-year performance. The following shows Green Caterpillar's income statement for the last two years. The company had assets of $11,750,000 in the first year and $18,796,000 in the second year. Common equity was equal to $6,250,000 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. Year 1 Green Caterpillar Garden Supplies, Inc. Income Statement For the Year Ending December 31 Net Sales Operating costs less depreciation and amortization Depreciation and amortization Year 2 $6,350,000 1,365,000 $317,500 1,682,500 $5,000,000 1,267,500 $200,000 1,467,500 Total Operating costs Operating Income (or EBIT) $4,667,500 466,750 $3,532,500 370,913 Less: Interest Earnings before taxes (EBT) $4,200,750 $3,161,587 Less: Taxes (40%) 1,680,300 1,264,635 Net Income $2,520,450 $1,896,952 Calculate the profitability ratios of Green Caterpillar Garden Supplies, Inc. in the following table. Convert all calculations to a percentage rounded to two decimal places. Calculate the profitability ratios of Green Caterpillar Garden Supplies, Inc. in the following table. Convert all calculations to a percentage rounded to two decimal places. Ratio Value Year 2 Year 1 70.65% Operating profit margin Net profit margin 39.69% 16.14% Return on total assets Return on common equity 30.35% 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. U A higher operating profit margin than the industry average indicates 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. U An increase in the return on assets ratio implies an increase in the assets a firm owns. If a company issues new common shares but its net income does not increase, return on common equity will increase