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# 4.1 Benefits of ratio analysis

Ratio analysis provides several benefits to analysts as explained in figure 8.

Figure 8 Comparing performance

Although ratio analysis is a useful tool for financial analysis, it can be of benefit only if it is used effectively. There are a number of factors that must be considered when performing ratio analysis. Video 1 explains these factors in detail.

Please note: this video references Units 5 and 6, as it is an excerpt from an OU qualification.

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Video 1 A few points to consider
Transcript
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OpenLearn - Financial statement analysis and interpretation
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