Some analysts claim that the true value of ratio analysis is not that ratios answer our questions,but rather that they help us ask better questions.

Question

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Ratio analysis helps us to understand the financial performance of a company by comparing different financial metrics. However, its true value lies in helping us to ask better questions about a company's financial state and how it can be improved. By analyzing ratios and asking relevant questions, we can identify potential problem areas and take corrective actions. Therefore, ratio analysis is a tool to enhance our understanding of a company's financial health and identify areas for improvement.

Some Analysts Claim That the True Value of Ratio Analysis