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Analyze the overall financial situation from a cross-sectional viewpoint. Compare each company’s ratios with the industry average. What are the strengths and weaknesses of each company? Which company is best to invest in and why?

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Answer:

Cross-sectional analysis is a type of analysis where an investor, analyst or portfolio manager compares a particular company to its industry peers. Cross-sectional analysis may focus on a single company for head-to-head analysis with its biggest competitors or it may approach it from an industry-wide lens to identify companies with a particular strength. Cross-sectional analysis is often deployed in an attempt to assess performance and investment opportunities using data points that are beyond the usual balance sheet numbers.