What does financial ratio analysis evaluate?

Financial ratio analysis focuses on evaluating a client’s financial condition through a quantitative examination of their financial statements. This analysis involves calculating various ratios, such as liquidity ratios, profitability ratios, and debt ratios, which provide insights into different aspects of the client's financial health. By comparing these ratios over time or against industry benchmarks, financial professionals can gauge the performance and stability of a client's financial position.

The other options do not align with the core purpose of financial ratio analysis. For instance, evaluating the historical performance of stock markets deals more with market trends and historical data rather than individual financial health. Similarly, assessing economic conditions affecting investments is broader and incorporates more external factors rather than the internal financial metrics seen in ratio analysis. Lastly, predicting future market trends of different commodities is a forward-looking analysis that does not directly relate to the current assessment of an individual’s financial statements. Thus, the focus on financial ratios makes the chosen answer the most appropriate for understanding a client’s financial standing.