Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Analysis of Financial Statements

Question:
Analysis of the financial statement of an enterprise over a period of time is known as:
Options:
Static Analysis
Time Series Analysis
External Analysis
Cross-sectional Analysis
Correct Answer:
Time Series Analysis
Explanation:
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).