Financial performance evaluation as at 30th May 2010 and 2009

1. Current ratio

Current ratio = Current assets / current liabilities

= 1,719,477 / 1,724,408

= 0.997

Current ratio = Current assets / current liabilities

= 1,512,634 / 1,285,769

= 1.17

Current ratio is very important in identifying whether the company is performing well and is capable of covering the companies' liabilities. It shows the credit worthiness of the company in meeting its immediate liabilities.

2. Return on Equity

Return on Equity = Net profit after tax / Shareholders equity * 100

= 36,676 / 903,368 * 100

= 4.05%

Return on Equity = Net profit after tax / Shareholders equity * 100

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= 75,920 / 911,823 * 100

= 8.32%

The return on equity is very important ratio to the company and to the shareholders. The shareholders are interested in the amounts of profits which the firm is able to distribute to them as dividends. The higher the more profits realized by the company hence there is also an increased in the dividends received by the shareholders. This has been the most treasure ratio by the shareholders and as such there is need by the company to prepare it as it indicates the performance o the company accordingly. The highly profitable companies are able to be identified by the calculation of this ratio. Barnes and Noble have reported a 4.05% and 8.32% in the year 2010 and 2009 respectively. This means that the company performed well in the year 2009 compared to 2010.

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