Analysis of Financial Statements of two enterprises is called...................

Cross sectional analysis

The correct answer is option 3- Cross sectional analysis.

Cross-sectional analysis is a financial analysis method used to compare different companies, projects, or investments at a specific point in time. Unlike time-series analysis, which examines the performance of a single company over multiple periods, cross-sectional analysis focuses on comparing similar items or metrics across different entities simultaneously.

Cross sectional analysis and vertical analysis are related but not the same. Vertical analysis (common size statements) is a method in which items are expressed as percentages of a common base within a financial statement. Cross sectional analysis refers to comparing the financial statements of two or more firms at the same point of time. Often, cross sectional comparison is done using vertical/common size statements, but the terms denote different concepts.