The advantages and disadvantages of ratio analysis are that it help stakeholder understand the company's financial position with the need to look at complex profit and loss account and a balance sheet. Calculating a few financial ratios can help you quickly assess how well you are doing and give you an early warning of financial problems. However, one major limitation of ratio analysis is that a single ratio can not help you understand your financial health. So you must calculate multiple ratios to come to some conclusion. Another limitation is that it is based on quantitative aspects of the firm and neglects qualitative aspects of the firm.