Identify the term that means Inter-firm Comparison.

Cross-Sectional Analysis

The correct answer is Option (2) - Cross-Sectional Analysis.

Cross-Sectional Analysis means Inter-firm Comparison.

Cross-sectional analysis involves comparing the financial performance or position of different firms at a specific point in time. This is used to evaluate and compare various companies within the same industry, providing insights into how one company is performing relative to others.

Financial statement analysis is a judgemental process that aims to estimate current and past financial positions and the results of the operation of an enterprise, with the primary objective of determining the best possible estimates and predictions about the future conditions. It essentially involves regrouping and analysis of information provided by financial statements to establish relationships and throw light on the points of strengths and weaknesses of a business enterprise, which can be useful in decision-making involving comparison with other firms (cross-sectional analysis) and with firms’ own performance, over a time period (time series analysis).

OTHER OPTIONS

• Time Series Analysis focuses on analyzing data over time within a single company, rather than comparing different firms.
• SWOT Analysis is a strategic tool that assesses a company's internal strengths, weaknesses, opportunities, and threats.
• Segment Analysis examines specific segments or divisions within a firm.