NISM Certifications · NISM-Series-XV: Research Analyst · Fundamentals of Research
A research analyst compares the reported net profit of Company A with the average of the same item for 10 listed peers to judge relative performance. Which type of analysis is this?
This is cross-sectional or comparative analysis, because the company's figures are compared with those of its peers at a given point in time. Time-series analysis would instead track the same company's figures across several periods, which is not what is being done here.
- ATime-series analysis of the company's own history
- BCross-sectional (comparative) analysisCorrect
- CSensitivity analysis of forecast assumptions
- DScenario analysis of macro variables
Explanation
Comparing a company with its peers or an industry average at one point in time is cross-sectional analysis. Time-series analysis would compare the company's own figures across years. Sensitivity and scenario analyses test how outputs change when assumptions change.
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