Which of the following is not true about ratio analysis?

The statement that ratio analysis only focuses on sales and employees and does not consider other factors is not true. Ratio analysis is a comprehensive tool used in financial and operational analysis that examines relationships between different financial metrics and data points. While sales and employee numbers might be key components in some analyses, ratio analysis encompasses a broader range of financial information, such as profits, costs, debt levels, and various efficiency metrics. This allows businesses to gain insights into performance across multiple dimensions, rather than being restricted to just sales and employment figures.

In contrast, the other statements accurately reflect certain aspects of ratio analysis. For example, ratio analysis can visually depict relationships between different variables, and it often operates under the assumption that productivity and certain conditions remain stable for the purpose of comparison and forecasting. Furthermore, forecasting based on historical ratios is indeed a fundamental function of ratio analysis, allowing organizations to predict future outcomes based on past data.