Audit and Assurance Practice Exam

Calculating the inventory per square foot of store space is an example of what type of analysis?

1. Vertical analysis

2. Horizontal analysis

3. Cross-sectional analysis

4. Trend analysis

The correct answer is: Cross-sectional analysis

Calculating inventory per square foot of store space represents cross-sectional analysis because it involves evaluating and comparing performance metrics across different stores or locations at a specific point in time. This type of analysis helps assess operational efficiency and productivity by taking a snapshot of various entities—such as different store locations—without considering changes over time. Cross-sectional analysis is particularly useful in retail contexts where comparisons can reveal insights about how different stores utilize their physical space and manage inventory relative to their size. It allows businesses to benchmark performance across various units and identify best practices or areas for improvement. The focus here is on understanding the performance within the same fiscal period rather than examining how metrics change over time or between varying periods, which would characterize the other types of analyses mentioned.