what is ratio analysis 
ratio analysis is a method of examining a company s balance sheet and income statement to learn about its liquidity operational efficiency and profitability it doesn t involve one single metric instead it is a way of analyzing a variety of financial data about a company ratio analysis is a cornerstone of fundamental equity analysis there are many different ratios that investors and other business experts can analyze to make predictions about a company s financial stability and potential future growth these can be used to evaluate either how a company s performance has changed over time or how it compares to other businesses in its industry investopedia theresa chiechi