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.
