Financial ratio analysis-Excellent tool for financial statements analysis & comparison

Financial ratio analysis is an effective & widely used tool for interpretation & analysis of financial statements, comparison between companies and industries etc. The financial ratios could be broadly classified into following categories based on areas in which those are providing insight like liquidity ratios, efficiency ratios, leverage ratios, profitability ratios, market ratios etc.
There are no commonly accepted fixed number of ratios but the macro level ratios could be decomposed into micro level ratios to get need based insight into performance at more granular level. The Dupont analysis is one example of decomposition and expansion of macro level ratios to arrive at comprehensive list of ratios covering the entire gamut of organizational performance. However, ratio analysis has some drawbacks like quality of data going into the financial statement preparation, different accounting standards going into preparation of financial statements etc.