Required Information Learning Objective 13-P3: Define and apply ratio analysis. Ratio analysis provides clues to and symptoms of underlying conditions. Ratios, properly interpreted, identify areas requiring further investigation. A ratio expresses a relation between two quantities such as a percent, rate, or proportion. Ratios can be organized into the building blocks of analysis: (1) liquidity and efficiency. (2) solvency. (3) profitability, and (4) market prospects. Market Prospects Ratios and Examples Knowledge Check 01 A company has earnings per share of $10 and the market price per common share is $50. What is this company's price-earnings ratio? Company's price-eamings ratio