The practice of comparing the firm to a subset of industry firms comparable in size or characteristics is referred to as
A) Common size analysis
B) Cross-sectional analysis
C) DuPont analysis
D) Proforma analysis
E) Time-series analysis

Question

Quizplus · Accepted Answer

Cross-sectional analysis involves comparing a firm to a subset of industry firms that are comparable in size or characteristics. Common size analysis involves comparing financial statements by expressing line items as a percentage of a base number. DuPont analysis involves breaking down return on equity (ROE) into its components. Proforma analysis involves projecting future financial statements based on assumptions. Time-series analysis involves analyzing a firm's financial performance over a period of time.

The Practice of Comparing the Firm to a Subset of Industry