Why is trend analysis helpful in analyzing ratios?

Answer to analysis questionTrend analysis gives the owner an up, down, or flat trend, and tells the owner whether he is doing better, worse or remaining the same. Lets take for example a Liquidity ratio over a four year Calendar Year period as displayed below:

CY 2000 = 3:1

CY 2001 = 2:1

CY 2002 = 1:1

CY 2003 = .65:1

This trend analysis is telling the owner that he/she has $3.00 in CA to pay CL. Over the course of the last four years the owners don't have enough money in CA to pay CL.