Sageworks, a financial information company, collects and analyzes data on the performance of privately-held companies and provides financial ratios analysis.

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As the graph shows, when cotton prices shot up in 2010, costs rose to an average 54.45 percent of sales from 53.5 percent the year before, according to the financial ratios analysis.

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But that being said, efficiency ratios have a role in analysis.

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However, supply and demand analysis is complicated, given that these ratios could shift instantly.

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Some stocks appeal to traders because of their price and volume action, while others appeal to investors who rely more on fundamental analysis: things like price-earnings ratios, sales growth, debt levels and the like.

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But he also uses sentiment indicators (like put-call ratios, short interest and media coverage) in his analysis and applies contrarian logic.

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