it campare the relation ship between two firms and past and 
present performance

Ratio analysis just reveals the company performance against 
set benchmark of company itself or that of industry.The 
sales, profit and expenses figures differ from company to 
company within same industry which cannot be reflected by 
ratio analysis. This ratio couldn't discriminate the 
intercompany's performance meticulously unless the figures 
are same.

Ratio Analysis has following Limitions :
1) Lack of understanding of basic principles.
2) Window Dressing
3) Different accounting policies of different companies.
4) Interpritation of results.