Accountancy Part BAnalysis of Financial Statements

Identify the term that means Inter-firm Comparison.

Answer & explanation

Correct answer: option 2

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

NCERT (2026-27 edition):
Meaning of Analysis of Financial Statements

Extract from the NCERT textbook

NCERT (2026-27 edition):
Objectives of Ratio Analysis – “… 4. To provide information for making cross-sectional analysis by comparing the performance with the best industry standards; and 5. To provide information derived from financial statements useful for making projections and estimates for the future.”