What are the advantages of inter firm comparison?
It is the inter-firm comparison that provides the management with a vivid comparative picture of how its operating performance, financial results, and product cost structure compare with those of other firms of similar size, nature, industry or trade.
What are the disadvantages of inter firm comparison?
Limitations of inter-firm comparison :
- Top management feels that secrecy will be lost.
- Middle management is usually not convinced with the utility of such a comparison.
- In the absence of a suitable Cost Accounting System, the figures supplied may not be reliable for the purpose of comparison.
What are the objectives of inter and intra firm comparison?
It is actually about the comparing of two more than two department of the same firm or the business unit. The main objective here is to improve the efficiency and analysis the performance of departments.
What is inter firm comparison with Example?
Inter Firm Comparison – Introduction. In a competitive situation, it is mandatory to have a comparison with the other similar organisation for finding out sales, profits and other matters. When the profit of one organisation is compared with the profit of another organisation, it is known as inter-firm comparison.
What is inter-firm?
: occurring between or involving two or more firms interfirm transactions …
What is the disadvantage of common size statement?
Liquidity and solvency position cannot be measured by Common-Size Statement. It considers the percentage of increase or decrease in various components of sales, assets, liabilities etc. In other words it does not help to ascertain the Current Ratio, Liquid Ratio, Debt Equity Capital Ratio, Capital Gearing Ratio etc.
What is the difference between inter-firm comparison and intra firm comparison?
A firm would like to compare its performance with that of other firms and of industry in general. The comparison is called inter-firm comparison. If the performance of different units belonging to the same firm is to be compared, it is called intra-firm comparison.
Which ratio is useful for inter-firm comparison?
Ratio Analysis is useful for inter-firm comparison.
Which statement is prepared for inter-firm comparison?
Those financial statements that enable intra-firm and inter-firm comparisons of financial statements over a period of time are called Comparative Financial Statements.
What are advantages of cost audit?
The chief advantage of a cost audit will be that management will be sure to get reliable data for its objectives — price fixing, decision-making, control, etc. Existence of such a system of audit will also be of great use for maintaining internal check and control and will be of great help to even financial audit.