Question

Cross Sectional ratio analysis provides comparison of the company performance over time.true false

Answer 1

False. Cross Sectional ratio analysis do not provides comparison of the company performance over time. Instead Time series analysis, or trend analysis provides comparison of the company performance over time.

Cross Sectional ratio analysis is a type of analysis in which investors, or portfolio managers compares a company with the companies in its industry. Cross Sectional ratio analysis can be used to compare a single company with its biggest competitors. It can identify a company with a particular strength around a particular industry. Cross Sectional ratio analysis are often used to assess performance and investment opportunities using data points which are beyond the usual balance sheet numbers. Cross Sectional ratio analysis helps in evaluating the target company's efficiency in the areas like valuation, debt-load, future outlook which helps in making the best investment choice among a group of competitors in the industry. Cross-sectional ratio analysis looks at data of a company collected at a particular time, rather than over a period of time.

Time series analysis focuses on a single company over time. In this, the company is compared with its past performance. Time series analysis is used to show whether the company is doing better or worse than before.