Question : The objective of financial statement analysis is _______ comparison.
Option 1: Inter firm
Option 2: Intra firm
Option 3: Both 1 and 2
Option 4: None of the above
Correct Answer: Both 1 and 2
Solution : Answer = Both 1 and 2
Financial statement analysis can be conducted through both inter-firm and intra-firm comparisons.
1. Inter-Firm Comparison: Inter-firm comparison involves comparing the financial performance of one company with that of other companies in the same industry or sector. This comparison helps assess how well a company is performing relative to its competitors.
2. Intra-Firm Comparison: Intra-firm comparison, also known as trend analysis or time-series analysis, involves comparing a company's financial performance and position over different time periods. This comparison helps assess the company's performance and financial health over time. Hence, the correct option is 3.
Question : Long-term and short-term solvency of an enterprise can be assessed on the basis of ___________.
Option 1: Financial statement analysis
Option 2: Inter-firm Comparison
Option 3: cross-sectional analysis
Question : Comparison of values of one period with those of another firm for the same period is known as –
Option 1: Intra-firm comparison.
Option 2: Inter-firm comparison
Option 3: Either 1 and 2
Question : Which of the following statements is incorrect?
Option 1: Inter-firm comparison becomes easy with the help of financial analysis
Option 2: Past financial statement analysis helps in assessing developments in future, especially in the next year
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