Cross-sectional ratio analysis is used to ________.
A) correct expected problems in operations
B) isolate the causes of problems
C) provide conclusive evidence of the existence of a problem
D) measure relative performance of a firm with its peers

Question

Quizplus · Accepted Answer

Cross-sectional ratio analysis is used to measure the relative performance of a firm with its peers. It involves comparing a company's ratios to industry averages to see how well it is performing in comparison to its competitors. It does not necessarily correct or isolate problems but rather helps identify areas where a company may need to improve to remain competitive. It also does not provide conclusive evidence of the existence of a problem, as further analysis may be needed to determine the root cause of any issues identified through ratio analysis.

Cross-Sectional Ratio Analysis Is Used to ________