Comparisons

 For many analysts, and especially credit analysts, who are trying to get a picture of a company’s health, a comparative analysis is the most important use of ratios. A ratio acquires more meaning when it’s compared to direct competitors, the company’s industry, or much broader standards, like the S&P 500.

A profitability measure, such as gross profit margin, reported at 25 percent tells more when direct competitors are at 35 percent plus.