The correct answer is: C. the comparison of financial ratios over a period of time to access the direction of change and the financial performance of the firm.
Time series analysis is a statistical method that involves analyzing data over time. In ratio analysis, time series analysis is used to compare financial ratios over a period of time to assess the direction of change and the financial performance of the firm. This can be done by plotting the ratios on a graph and looking for trends. For example, if a firm’s profit margin is increasing over time, this indicates that the firm is becoming more profitable.
Option A is incorrect because it refers to making a time series of various ratios to assess the firm’s profitability. This is not the same as time series analysis, which involves comparing financial ratios over a period of time.
Option B is incorrect because it refers to a graphical comparison of the firm’s sources of finance. This is not the same as time series analysis, which involves comparing financial ratios over a period of time.
Option D is incorrect because it refers to a comparison of time values for various ratios of the firm. This is not the same as time series analysis, which involves comparing financial ratios over a period of time.