Asked by Nakaila Lovett on Apr 28, 2024
Verified
A comparison of a company's performance with that of competitors is known as
A) vertical analysis
B) horizontal analysis
C) intracompany comparisons
D) intercompany comparisons
Intercompany Comparisons
Intercompany comparisons involve analyzing and evaluating the financial performance and strategies of different entities within the same group or company to identify discrepancies and opportunities for optimization.
Vertical Analysis
A financial analysis method that compares line item amounts on a financial statement to a base figure to determine each item’s relative size or contribution to the whole.
- Gain insight into the critical nature of diverse financial analysis approaches (horizontal, vertical) and the process of comparing them.
Verified Answer
KM
kailashini manoharanApr 29, 2024
Final Answer :
D
Explanation :
Intercompany comparisons involve comparing a company's performance with that of competitors in the same industry, whereas intracompany comparisons involve comparing a company's performance over time. Vertical analysis involves analyzing a company's financial statements by expressing each item as a percentage of a base amount, while horizontal analysis involves comparing financial data over multiple periods to identify trends and changes. Therefore, the best choice is intercompany comparisons.
Learning Objectives
- Gain insight into the critical nature of diverse financial analysis approaches (horizontal, vertical) and the process of comparing them.