How Can Ratio Analysis Identify Business Weaknesses?

ratio analysis is quite helpful in identifying the weaknesses of organizations and enhancing their efficiency. Ratio analysis allows organizations to examine their financial statement and detect where there are problems such as inefficiency or reduced profitability. Ratio analysis makes the comparison of various financial ratios from one period to another or from one organization to another easy. Managers can make necessary changes in order to improve organizational efficiency through ratio analysis. Investors also benefit from ratio analysis by considering risks involved before investing in an organization.