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Two primary financial perspectives used when performing financial ratio analysis?

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What are the two primary financial perspectives used when performing financial ratio analysis? Please explain. How may years of financial reports should one review at the same time?

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In 225 words, the solution provides an excellent explanation for the two primary financial perspectives.

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1) The two primary perspectives used in financial ratio analysis are:

a) Time-series analysis. This perspective shows the financial results of the firm over a certain time period. For example, profits (y-axis) can be plotted over the last 5 years (x-axis).

b) Cross-section analysis. Here we take the ...

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