How can ratio analysis help in measuring business performance and setting objectives or goals?

Ratio analysis helps in measuring business performance by providing quantitative insights into a company's financial health, efficiency, and profitability. By analyzing key ratiOS such as liquidity, profitability, and leverage, businesses can identify strengths and weaknesses, enabling informed decision-making. This analysis also aids in setting realistic objectives and goals by benchmarking performance against industry standards or historical data, ensuring that targets are achievable and aligned with overall strategic plans.