In many cases, we will look at ratios at a given point in time in order to see what's going on. After all, a ratio is a snapshot of financial performance.
Ratio analysis becomes truly effective when it involves looking at ratios at several points in a company's existence. In other words, sometimes one snapshot is not enough. We may want to take a snapshot of the same item at different times.
Comparing the snapshots helps us identify trends --- and annual trends in ratios can be especially important in analyzing business situations.