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The analysis of financial statement is a process of evaluating the relationship between component parts of financial statements to obtain a better understanding of the position and performance of a firm. The first task of the financial analyst is to select the relevant information from the total information contained in the financial statements. Financial statements are the instruments watch out the performance of a business enterprise. They highlight a managerial performance attesting managerial success or failure and the flashing signals of impending difficulties. Ratio analysis is technique of analyzing the financial information contained in the balance sheet and Profit & loss account for more meaningful understanding of the financial position and performance of firm.The field of financial management requires from financial executive to measure the performance by using best tools. The effectiveness of ratio analysis cannot be neglected because of its wide contributions in measuring financial performance. The aim of this research study is to analyze the effectiveness of ratio analysis, as important tool for measuring the performance of organization by applying the ratio analysis

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