Final answer:
Ratio analysis is a tool used in business to evaluate the financial performance of a company.
Step-by-step explanation:
Ratio analysis is a tool used in business to evaluate the financial performance of a company. It involves comparing different financial ratios to gain insights into various aspects of a company's operations, profitability, and financial health. For example, the current ratio compares a company's current assets to its current liabilities, giving an indication of its short-term solvency. Similarly, the profit margin ratio compares a company's net income to its sales, providing insights into its profitability.