what is ratio analysis?

A ratio analysis is a technique that can be used to analyze variables. It enables decision-makers, in marketing, finance, manufacturing and other fields to identify the key performance indicators that need to be further examined and developed. A ratio analysis can provide data on how a company’s performance is evolving. It also helps determine how different measures of performance relate to each other. This type of analysis is useful for measuring the evolution of a company or project over time and identifying trends within an organization.

A ratio analysis uses ratios as an input metric and outputs numerical results via graphs or tables with labeled axes so that managers can understand the data without any calculations being done manually by managers or staff members.