Which analysis type is utilized for comparing financial performance of a company across different companies?

The correct analysis type for comparing the financial performance of a company across different companies is ratio analysis. Ratio analysis involves evaluating the financial performance of a company by analyzing various financial ratios derived from its financial statements. This technique allows for benchmarking and comparison, enabling stakeholders to assess the relative performance of companies within the same industry or sector.

Ratio analysis considers various metrics such as profitability ratios (like net profit margin), liquidity ratios (like current ratio), and solvency ratios (such as debt-to-equity ratio), which can be compared between companies to identify patterns, strengths, and weaknesses. This comparative approach illuminates how well a company is doing in relation to its peers, providing valuable insights for investors, analysts, and management.

On the other hand, horizontal analysis focuses on trends over time within a single company's financial statements, vertical analysis examines specific line items within a single financial statement, usually expressed as a percentage of a total, and trend analysis involves reviewing financial data over multiple periods to identify direction and momentum. While these analyses are essential for gauging a company's performance over different dimensions, they do not directly enable the type of cross-company comparisons made possible through ratio analysis.