What are the advantages of ratio analysis?

Ratio Analysis : The Word suggest that the proportion of one thing to other, RatiOS are categorized in many category and each category has its own importance like

Profitability Ratio: This ratio can help to understand hows company's financial position.

Market related RatiOS: This ratio help to understand how much investors are earning by investing in investment

Activity Ratio: This ratio help to understand is company able to mange its day to day activity efficiently like payment to debtors, conversion of inventory. operating cycle of the business.

1)Investors can take decision whether to invest in to the company or not

2) Some ratiOS help to make prediction about the future of company's financial health so that they can take decision whether to deal with company or not?

3) Creditors able to understand whether company will able to make future payment

4) bank able to measure is company able to pay credit in time

5) The management able to track the activities so that they take immediately steps to control