Answer :
Ratio analysis helps managers compare an organization's productivity, profitability, and financing mix with other similar entities.
What is Ratio analysis?
Ratio analysis is the study or analysis of a line items included in the company's financial statements. It may be used to evaluate a number of aspects of a firm, including profitability, liquidity, solvency, and operational effectiveness.
Ratio analysis is the study of several financial data points seen in a company's financial statements. There are primarily five broad categories of ratios, such as liquid assets, solvency ratios, profitability, efficiency ratios, and coverage ratios, which are used to analyze the company's finances and the trend of the company's results over years. These ratios serve as indicators of the performance of the company.
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