What is an important outcome of ratio analysis?

Ratio analysis is a useful tool in accounting and finance that focuses on understanding and interpreting relationships within financial data. By using key financial ratios, such as liquidity ratios, profitability ratios, and solvency ratios, stakeholders can assess the performance and financial health of a business. This analysis helps to draw meaningful comparisons between different aspects of a company’s finances, enabling better decision-making.

For example, by analyzing the relationship between current assets and current liabilities, one can determine liquidity levels and whether the company can meet its short-term obligations. This ability to derive insights from financial numbers is crucial for management, investors, and creditors when evaluating the company's operational efficiency and overall performance.

The other options do not accurately reflect the primary purpose of ratio analysis. While it may offer insights into market trends or simplify complex financial concepts, it does not guarantee financial stability, nor does it predict future market trends with accuracy.