What key information do managers gain from ratio analysis?

Managers utilize ratio analysis to obtain a clearer picture of operational efficiency within the organization. This involves analyzing various financial ratios such as inventory turnover, asset utilization, and operating margin to assess how well the company is managing its resources and operations.

By focusing on operational efficiency, managers can identify strengths and weaknesses in their processes, determine how effectively the company converts resources into outputs, and assess performance relative to industry standards. This insight helps in making informed decisions about cost management, process improvements, and resource allocation.

While other options involve important aspects of financial analysis, they do not specifically focus on the operational side as directly as the assessment of efficiency does. For instance, forecasting future cash flows and understanding market trends are crucial for strategic planning but they are not the primary insights derived from ratio analysis itself. Similarly, while employee productivity is vital, it typically requires different metrics and analyses beyond standard financial ratios. Thus, operational efficiency stands out as the central notion that ratio analysis illuminates for managers.