The key to cross-sectional analysis comparison of firm ratios include:
A) Identifying similar firms that compete in the same markets.
B) Identifying similar firms that have similar asset sizes.
C) Identifying firms that operate in a similar manner.
D) All of the above.

Question

Quizplus · Accepted Answer

Cross-sectional analysis involves comparing a company's financial ratios or conditions to those of other firms in the same industry at the same point in time. This comparison is most meaningful when it includes firms that compete in the same markets (A), have similar asset sizes (B), and operate in a similar manner (C), ensuring that the analysis is comparing like with like.

The Key to Cross-Sectional Analysis Comparison of Firm Ratios Include