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"In spite of its limitations ratio analysis is widely used as a means of evaluating the past performance and predicting the future successes or failures of business organisations." Ratio analysis Ratio shows the relationship between two numbers. Accounting ratios is the relation between two accounting figures. Companies are constantly evaluating their performance with its historical figures they have with its industry competitors, and even with successful businesses from other industries. Financial ratios provide important information in establishing standards, controlling performance and offer operational information which are essential to make certain changes for the betterment of the firm. (Rachlin 1997) Advantages:- * Financial ratios act as a system which gives important trend information of the companies future strength based on the historical data. * Financial ratios analysis help in comparing and calculating ratios which come from companies financial reports. On the basis of these the derived level and historical trend assists in making inferences about a...

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