Match List-I with List-II. LIST I(Book/Theory proposed/Characteristic…

Match List-I with List-II.

LIST I (Book/Theory proposed/Characteristic, etc.)	LIST II (Author/Thinker/Name of Theory, etc.)
(A) Comparative Statements	(I) study the operational results over the series of years
(B) Common Size Statements	(II) express the relationship between various items of financial statement
(C) Trend Analysis	(III) study the relationship between two or more years
(D) Ratio Analysis	(IV) express each item as a percentage of the common base or item

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → (A)-(III), (B)-(IV), (C)-(I), (D)-(II)

The four common tools of financial analysis differ in what they compare: two or more periods, items against a common base, a series of years, or items against each other.

(A) Comparative Statements — this matches (III) study the relationship between two or more years. Comparative statements set the figures of different periods side by side, so the position of two or more periods can be compared.

(B) Common Size Statements — this matches (IV) express each item as a percentage of the common base or item. Every item is shown as a percentage of one common item (revenue from operations, or total assets), which is why the statement is also called vertical analysis.

(C) Trend Analysis — this matches (I) study the operational results over the series of years. Trend analysis takes a base year and follows each item over a series of years to see whether it is rising or falling.

(D) Ratio Analysis — this matches (II) express the relationship between various items of financial statement. A ratio relates one item to another (current assets to current liabilities, profit to revenue), so it shows the relationship between items.

NCERT (2026-27 edition):
Tools of Analysis of Financial Statements – “… Comparative Statements: These are the statements showing the profitability and financial position of a firm for different periods of time in a comparative form to give an idea about the position of two or more periods.”

NCERT (2026-27 edition):
Tools of Analysis of Financial Statements – “… Common Size Statements: These are the statements which indicate the relationship of different items of a financial statement with a common item by expressing each item as a percentage of that common item.”

NCERT (2026-27 edition):
Tools of Analysis of Financial Statements – “… Trend Analysis: It is a technique of studying the operational results and financial position over a series of years.”

NCERT (2026-27 edition):
Tools of Analysis of Financial Statements – “… Ratio Analysis: It describes the significant relationship which exists between various items of a balance sheet and a statement of profit and loss of a firm.”