What tool is often used to evaluate a company's performance in financial analysis?

Financial ratios are widely used in financial analysis to evaluate a company's performance because they provide a standardized way to assess different aspects of a company's financial health. Ratios, such as the current ratio, return on equity, and debt-to-equity ratio, allow analysts and investors to quickly compare a company's performance against its historical data, industry benchmarks, or competitors. These ratios encapsulate complex financial data into more manageable figures, making it easier to identify trends, strengths, and weaknesses in a company's operations and financial strategies.

While standard deviation is a statistical measure that assesses volatility or risk, it does not directly evaluate financial performance. Market assessments involve analyzing external factors affecting a company but do not provide a direct insight into internal financial efficiency. Regression analysis can be useful in understanding relationships between variables or forecasting trends, but it is more complex and not primarily a performance evaluation tool like financial ratios.