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Ratio analysis is a comparison of numbers. It is used in financial studies as well as math classes across the country. It is tough to figure out in the beginning, but one you get the hang of it, they will be easy to decipher.

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Q: What is ratio analysis?
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The ratio analysis is useful for inter firm comparison which basically implies that a company compares its performance with that of its industry peers. Ratio analysis is very important in simplifying the accounting figures to make then understandable to a common man.


How does trend analysis compliment ratio analysis?

Ratio analysis shows how a company performed at a given time. Trend analysis shows how a company performed over time and whether the company has done better, worse, or stayed the same.