# NG_samples

slug: eating-disorder-and-freuds-psychosexual-development-theory
title: Eating Disorder And Freud’s Psychosexual Development Theory
academic_level: Undergraduate
subject: Psychology
type_of_paper: Essay
citation_style: APA
meta_title: Eating Disorder And Freud’s Psychosexual Development Theory
meta_keywords: eating disorder
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created_at: 2025-06-24 11:47:02
updated_at: 2026-01-14 15:46:06
status: published
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  <p>[Student ID]</p>
  <p>[Name of the Institution]</p>
  <p>[Date of Submission]</p>
  <p>One of the most severe and multidimensional mental health issues that includes the aspects of emotional and physical health is eating disorders. The disordered eating behaviours affect emotional connection to food, weight and external appearance. Anorexia, bulimia, and bingeing eat disorders are all types of eating disorder. Diseases with an unknown cause may occur at any age to an individual, it does not matter when in life. They target people from all classes of human beings, irrespective of age, race, and ethnicity. Eating disorders pervade male and female boundaries and it is the misconception that only females are affected by such challenges. Boys and men, too, are vulnerable to the same dangerous consequences and need the same measures to overcome them. This paper evaluates psychodynamic and behavioural models which analyst can sequentially apply to an eating disorder patient.</p>
  <p>The German psychiatrist Sigmund Freud (1856-1939) along with his fellow researchers proposed the psychodynamic theory that defines the nature and conduct of human beign (Lacombe et al., 2022). This theory of Sigmond contains all types of psychological views that the process of human functioning is initiated due to the interaction of efforts and forces within the personal context which notably the unconscious (Iscan &amp; Iscan, 2023). This idea also asserts that experiences in an individual's youth have a substantial impact on their later lives, shaping their personality. Sigmond further noted that the end of each stage of sigmund&rsquo;s 5 stages of development in which he explain the adolescents' pleasure-seeking determinations focus on a new places. This is known as an erogenous zone (Lacombe et al., 2022). Thus, it might be analysed using the theoretical perspective that the personality is shaped as the urges are affected by different conflicts at different times in childhood (during psychosexual development).</p>
  <p>Throughout the initial accounts of gastrointestinal disorders (EDs), psychosexual difficulties have been linked to them. Sexual conflicts throughout adolescence have been linked to the development of anorexia nervosa (AN) (Traylor et al., 2022). Starting of the middle age is the literary portrayals of initial Christian saints also termed as starving saints that comes up with the denial of physical necessities, devotion to non-physical undertakings, and spiritual asceticism, creating images of young girls estranged from their sexuality and terrified of normalcy. Thomas (2021) defines anorexia hysterique as the addition of heterosexual concerns in adolescent patients, while the term anorexia nervosa was coined in England at the same time.</p>
  <p>The scientific backing of Lacombe et al. (2022) work and statements brought the modern era into focus, emphasising that deficits in the developmental factors of self-regulation, autonomy, identity formation, individuation and separation were major contributors to the development of AN in individuals adolescent age. Vertel (2022) expounded on these developmental aspects, claiming that the development of AN indicates a dread of maturation and a desire to reset the biological clock of puberty to a more peaceful, easy time before adolescence. Currently, numerous researchers and theorists are investigating the impact of physical milestones, 5 stages of development and pubertal experiences in the aetiology and appearance of EDs in adolescence.</p>
  <p>Today, the nuclear family at 18-23 years old is seen as an independent person set apart from his family in a wider and more varied society. Separating from parents (the first of the three main adolescent tasks, i.e., developing the independence), seeking one's sexual identity, and planning own adult life in terms of education or career (the second and the third tasks from the list) may be the sources of eating disorders (Learning, 2020). All of these acts of duty, Bearing to one personal perspective, contribute to identity development and the process of self-realization. The early psychiatry discourse characterized EDs as a developmental crisis that impacts young females and capable of being triggered by deeper physical development of breasts characteristic of puberty. Iscan and Iscan (2023) scholars suggest that an anorectic's deterioration of AN would be related to its retraction in the psychosexual development stages as a consequence of maturational pressures in adolescence, which the patient experiences as malignant and dreadful.</p>
  <p>A number of studies have recognised teenage development as a potential safety factor for the progress of an eating disorder among the teen agers, as well as sub-syndrome maladaptive eating issues or attitudes and severe weight control behaviours (Thomas, 2021). This type of research typically focuses on nonclinical, non-patient, community populations, often in school settings, and employs self-report measures, questionnaires and individual interviews, surveys and observations follow-up. The majority of the research is cross-sectional; however longitudinal data are now available in recent publications. Exiting studies does not specify which subjects have eating disorders or which young adolescents will develop them, but it does suggest that some factors may place certain adolescents at risk (Ng et al., 2022). If children and adolescents who are at risk are recognised early, preventative methods may be undertaken. However, it is still debated whether preventative programmes achieve their desired outcomes.</p>
  <p>A small amount of study has discovered a link between early maturation and eating disorders. A variety of approaches have been employed in the literature to assess pubertal development, including Tanner stages, pubertal maturation, physical measures, maternal report, self-report and body fat assessments (Bachar, 2020). Puberty, which includes normal weight increase and bodily changes as well as other biological and psychological changes, puts some teenagers in direct conflict with the dominant cultural idealisation of a slender body, particularly for girls. Bachar and Verbin (2020) discovered that tardy timing of puberty is linked to sadness, body image difficulties, and eating disorders. Looking at a younger cohort of girls in elementary school of UK concluded that more developmentally advanced (but not older) girls may be more vulnerable to the development of EDs (Adnani, 2020). Brenner (2022) discovered increased dieting and disordered eating in females adjusting to the fat related with menarche and dating's appearance demands.</p>
  <p>A biodynamic perspective on conduct emphasises internal conflicts, motivations, and unconscious influences. Many ideas exist within the psychodynamic arena about the development of psychiatric diseases in general, as well as the genesis and origins of eating disorders in particular (Cosenza and Busiol, 2021). This book does not cover each psychodynamic theory and its corresponding therapy strategy, such as object relations or self-psychology.</p>
  <p>All mental health theories share the concept that if the underlying cause of disordered behaviours is not addressed and resolved, they may lessen for a period but then resurface (Grose-Fifer et al., 2021). The early pioneers made it known that utilising behaviour modification strategies to encourage people to gain weight may result in short-term improvements but not long-term results. Therapists with a psychodynamic view, like Grynick (2020), think that recognising and addressing the source, adaptive function, or purpose of the eating problem is critical for complete recovery.&nbsp;</p>
  <p>According to Hamlin's (2022) the hypothesis of psychodynamic when wants are not supplied during human development, adaptive functions emerge. These adaptive functions act as substitutes for developmental inadequacies, protecting against the accompanying anger, frustration, or suffering. The issue is that adaptive functions can never be internalised (Lacombe et al., 2022). They have long-term effects that jeopardize health and function, and they can never fully replace what was initially needed. For example, someone who has never learned to self-soothe may turn to food for consolation and thus binge eats when disturbed (Learning, 2020). Consuming excessive amounts of food will never help her internalise the skill to comfort herself, and will almost certainly result in undesirable repercussions such as weight increase or social withdrawal (Iscan &amp; Iscan, 2023). Understanding and addressing the adaptive functions of eating disorder behaviours is critical in assisting patients to internalise the potential to achieve and maintain recovery.</p>
  <p>Psychodynamic theory, in its whole, sees eating disorders and weight control as indicators of a troubled inner self that uses these behaviors to communicate or express underlying issues (Lacombe et al., 2022). Direct measures to eliminate the symptoms have been considered unnecessary because they are thought to be helpful to the patient. The idea behind a strict psychodynamic approach is that disordered eating patterns would disappear if the underlying issues could be addressed, resolved, and worked through (Traylor et al., 2022). The psychological attitudes are mostly produced as regular psychotherapy sessions; on one hand, based on the interpretations and the management of the transference relationship or the patient&rsquo;s view of the therapist (Ukulor, 2024). Whether the psychoanalytic approach or any of other modalities is used, the main objective is to help individual to uncover emotional connections between their past, personalities and interpersonal relations as well as how it is all connected to their eating disorders.</p>
  <p>Psychodynamic treatment of those with eating disorders presents two challenges. Emotional eating is a complex issue, and many athletes are in states of hunger, sadness, or compulsivity due to compensatory eating dieting that makes psychological interventions ineffective (Hamlin, 2022). Therefore, starvation, thoughts of suicide, alternating between episodes of binge eating followed by compensatory purging or major physical problems might have to be ruled out before advising sex-therapy for the couple. Aggravatingly, in psychodynamic it takes the patients years to form insights with no diminished symptomatic actions (Grynick, 2020). Maintaining this kind of treatment for a long time without seeing symptom improvement seems inefficient and unfair.</p>
  <p>Psychological therapy is a valuable component of treatment for those with eating disorders, but it has not been demonstrated that a rigid psychodynamic approach in isolation, without any discussion of eating and weight-related behaviours, is particularly helpful in producing high percentages of complete recovery (Cosenza and Busiol, 2021). It is eventually necessary to deal directly with the disturbed behaviours. Cognitive behavioural therapy is the most well-known and researched strategy or treatment approach utilised today to transform, manage, and confront certain weight-related and dietary behaviours.</p>
  <p>The work of Aaron Beck first created cognitive behavioural therapy (CBT) in the late 1970s as a depression treatment strategy. The core idea of cognitive behavioural therapy is that cognitions (thoughts) cause feelings and behaviours. Albert Ellis's well-known Rational Emotive Therapy (RET) comes to mind. The clinician's role is to assist individuals in recognising cognitive distortions and either choosing not to act on them or, better yet, replacing them with more realistic and good ways of thinking (Bachar, 2020). Common cognitive distortions include all-or-nothing thinking, overgeneralization, presuming, magnifying or minimising, magical thinking, and personalising.</p>
  <p>People acquainted with disorders such as eating disorders will recognise the same or comparable cognitive distortions voiced by eating disordered individuals in treatment (Cosenza and Busiol, 2021). Obsessive weighing, laxative use, sugar restriction, and binge eating once one forbidden food item passes the lips are all examples of disordered eating or weight-related behaviours (Thomas, 2021). Regardless of theoretical orientation, most practitioners will eventually need to challenge and address their patients' skewed attitudes and beliefs in order to disrupt the resulting behaviours (Ng et al., 2022). If not addressed, the symptomatic and distortions behaviours are likely to reoccur or persist.</p>
  <p>Emergency rooms are ususally not provided easily in this type of disorders. This is the reason that both shows great working relationship between psychosexual development and ED onset is not entirely known, but it is a source of ongoing interest and research. Psychosexual variables are neither required nor sufficient for the development of an ED. The sociocultural setting, which is characterised by a preoccupation with shape and weight, as well as the idealisation of an ultrathin body for girls and a muscular and lean physique for males, serves as the backdrop for all teenagers' development. Human components, such as biological, genetic, and behavioural investments, interact with outside factors and familial difficulties in larger society. Apparently a developing adolescent's timing and combination of psychosexual and other contributing factors is what puts them on the path to developing an eating disorder.</p>
  <h2>References&nbsp;</h2>
  <ul>
  <li>
  Adnani, T. (2020). Professor Joseph Dodds Psychology of Art and Culture 29 May 2020 Food Behavior, Culture, and Psychology.
  </li>
  <li>
  Bachar, E. (2020). Anorexia and Bulimia: Diagnosis and History of Treatment. In Psychodynamic Self Psychology in the Treatment of Anorexia and Bulimia (pp. 3-18). Routledge.
  </li>
  <li>
  Bachar, E., &amp; Verbin, A. (Eds.). (2020). Psychodynamic self psychology in the treatment of anorexia and bulimia. Routledge.
  </li>
  <li>
  Bowker, C. A. (2021). Schema modes in eating disorders: an interpretative phenomenological analysis. Rhodes University.
  </li>
  <li>
  Brenner, N. V. (2022). Psychoanalytic Perspective on Eating Disorder Treatment: A Qualitative Inquiry (Doctoral dissertation, Capella University).
  </li>
  <li>
  Cosenza, D., &amp; Busiol, D. (2021). Anorexia, bulimia, binge-eating and obesity. An interview with Domenico Cosenza. In Lacanian Psychoanalysis in Practice (pp. 165-176). Routledge.
  </li>
  <li>
  Farstad, S. M., &amp; von Ranson, K. M. (2020). Personality and Eating Disorders. In Encyclopedia of Personality and Individual Differences (pp. 3614-3616). Cham: Springer International Publishing.
  </li>
  <li>
  Grose-Fifer, J., Spielman, R. M., Dumper, K., Jenkins, W., Lacombe, A., Lovett, M., &amp; Perlmutter, M. (2021). Freud and the Psychodynamic Perspective. Introduction to Psychology (A critical approach).
  </li>
  <li>
  Grynick, K. L. (2020). Recovering Persephone: An Archetypal Perspective on the Eating Disorder Experience and Descent-Emergence. Pacifica Graduate Institute.
  </li>
  <li>
  Hamlin, E. (2022). Hollow women, stuffed women: body image and the imagined body in patients with eating disorders. British Journal of Psychotherapy, 38(1), 61-78.
  </li>
  <li>
  Iscan, S., &amp; Iscan, C. (2023). Food and sexuality. Food Matters: Biopsychosocial Perspectives, 39.
  </li>
  <li>
  Lacombe, A., Dumper, K., Lovett, M., Perlmutter, M., Spielman, R. M., &amp; Jenkins, W. (2022). Lifespan Theories. Introduction to Psychology.
  </li>
  <li>
  Learning, L. (2020). Psychodynamic Theories. Lifespan Development.
  </li>
  <li>
  Magagna, J. (2021). A psychotherapeutic understanding of eating disorders in children and young people: Ways to release the imprisoned self. Routledge.
  </li>
  <li>
  Ng, Q. X., Lim, Y. L., Loke, W., Chee, K. T., &amp; Lim, D. Y. (2022). Females with eating disorders and urinary incontinence: a psychoanalytic perspective. International Journal of Environmental Research and Public Health, 19(8), 4874.
  </li>
  <li>
  Spielman, R. M., Dumper, K., Jenkins, W., Lacombe, A., Lovett, M., &amp; Perlmutter, M. (2021). Lifespan theories. Introduction to Psychology (A critical approach).
  </li>
  <li>
  Spielman, R. M., Dumper, K., Jenkins, W., Lacombe, A., Lovett, M., &amp; Perlmutter, M. (2021). Freud and the Psychodynamic Perspective. Introduction to Psychology (A critical approach).
  </li>
  <li>
  Thomas, K. (2021). Psychodynamics: chapter 4 The Freudian Approach. Introduction To Psychology: Vol 1.
  </li>
  <li>
  Traylor, J., Overstreet, L., &amp; Lang, D. (2022). Psychodynamic Theory: Freud. Individual and Family Development, Health, and Well-being.
  </li>
  <li>
  Ukulor, D. C. (2024). Critical Analysis Of Sigmund Freud&rsquo;s Theory On Education. BW Academic Journal, 11-11.
  </li>
  <li>
  Vertel, A. V. (2022). Classification of Child Development Stages in Psychoanalytic Pedagogy (on Example of Sigmund Freud&rsquo;s Classical Psychoanalysis).
  </li>
  </ul>

meta_description:
  The disordered eating behaviours affect emotional connection to food, weight and external appearance.


slug: how-do-security-threat-narratives-facilitate-racialised-dispossession-and-settler-colonialism
title: How Do Security Threat Narratives’ Facilitate Racialised Dispossession And Settler Colonialism?
academic_level: Undergraduate
subject: Philosophy
type_of_paper: Essay
citation_style: APA
meta_title: How Do Security Threat Narratives’ Facilitate Racialised Dispossession
meta_keywords: security threat narratives
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created_at: 2025-06-24 12:04:27
updated_at: 2026-01-14 15:45:58
status: published
content:
  <p>[Student Name/ID]</p>
  <p>[Date]</p>
  <h2>Introduction&nbsp;</h2>
  <p>Karl Marx, in his infamous &lsquo;Capital&rsquo; specially highlighted the concept notion of settler colonialism. According to Marx the indigenous population of the Americas was faced an appalling treatment in the plantation areas colonised by Europeans even though they were created for export trade exclusively. But in the colonies settler areas the Christian character of primitive accumulation was not disproved. Referring to ancient Greece, Marx referred to similarity of colonial settlers between the Athenian settler colonies, also called cleruchy and European settlers because in both entire indigenous population was removed forcibly and often violently for the settlers (Fung, 2021). The main purpose of settler colonies, whether modern or ancient, is direct expropriation of land. This objective is often achieved through outright extermination of local people. The extermination includes expulsion or extinction of the indigenous population (Locker-Biletzki, 2020).&nbsp;</p>
  <p>There were massive genocides of indigenous population by the main English settler colonies during the 19th century. These areas are now independent countries such as United States, Australia, and Canada. The settlers outnumbered indigenous people and resorted to violence and mass murder to achieve their aims and interests. However, the resistance against foreign invaders continued and succeeded to achieve freedom. The settler colonialism in the New Zealand was a little unique as the Maori showed more effective resistance and therefore saved from extinction and continue to show larger presence (Taylor, 2021) as compared to their counterparts in other parts of the world. There were also wide scale settler colonialism in Sub-Saharan African by Britain which include Zimbabwe, South Africa, and Kenya. But full extinction could not be achieved because the size of indigenous population in Africa was much larger. However, there are clear indications of apartheid by white settlers in these areas. A similar case is the Algerian settler colonialism by France which began in 1830s and led to the Franco-Algerian War in the middle of 20th century but ended up in decolonization (Veracini, 2021).&nbsp;</p>
  <p>The practices of dispossession and forced removal of indigenous people continue still today but by different agents and for different agenda. Today, many states are undertaking similar tactics against indigenous people under the guise of security narratives. These security narratives include national security as well as protection of natural resources such as protected parks. The aim of this essay is analyse the way security threat narratives have played significant role in racialised dispossession under settler colonialism in various parts of the world. The essay uses case studies of Palestine, Mayan Forests, and Maasai in Tanzania to demonstrate that colonial settlers have adopted both violent/military and non-violent/non-military strategies to conduct dispossession of indigenous people. Israel has been using national security agenda to continue with its militant colonial settler in Palestine. On the other hand, the Mayan and Maasai communities are facing extreme dispossession in the name of conservation of natural resources.</p>
  <h2>Discussion&nbsp;</h2>
  <h3>Case Study 1: Palestine&nbsp;</h3>
  <p>Palestine is one of the long standing and ongoing case study of settler colonialism. The apartheid in Palestine by Israel began in 1948 with the Nakba movement. Israeli settlers faced similar conditions in Palestine as faced by British and French settlers in Africa and Algeria. The size of Palestinian population was much larger than the size of settlers despite continuous and large scale genocide. The underlying long term goal of apartheid in the occupied Palestinian territories of Zionist settler colonialism is to completely eliminate Palestinians population. In fact, Israel-Palestinian conflict is the main driver of long lost debate of settler colonialism. The theoretical and historical context of settler colonialism has re-emerged with invasion of Israel in Palestine (Hughes, 2020). The settler colonialism in Palestine is the product of virulent anti-Semitism in late 19th-century in which millions of Jews were killed and displaced from Europe. Other international actors particularly British manipulated this situation as a long-term strategic policy in this region, as manifested in the Balfour Declaration of 1917 (Hughes, Velednitsky, and Green, 2023).</p>
  <p>The fundamental agenda and narrative of Israel as justification for their invasion in Palestine is survival and security of their people and community against Palestinian resistance. But according to Ghantous and Joronen, (2022) the conception of settler colonial project in Palestine and the occupation of entire historic Palestine under Zionist rule is older than Nakba and Nazi holocaust. In their 1929 constitution, the Jewish National Fund (JNF), the parastatal agency that declared that Palestinian land was an inalienable property of the Jewish people. The JNF is the main body that manages land distribution in the Israeli-occupied territory. The constitution also declared that JNF was solely obliged for the good of Jewish people and was not responsible for the welfare of non-Jewish population (Ghantous and Joronen, 2022). The colonial settlers in Palestine had been struggling to create a Jewish Homeland after the Holocaust due to which millions of European Jews were displaced and later made their allegiance with the Zionism. The Palestine population were over one million Palestinians having Jewish origin yet having radically different culture and religion then European Jews. The purpose of Zionist settler colonialism is to convert entire Palestine into a greater Israel state. They gained the support of USA as the hegemonic force in the world (Lentin, 2020).</p>
  <p>The concept of settler colonialism has confirmed in case of Palestine and Israel conflict as early as 1965. The critiques had confirmed that this conflict was classic example of settler colonialism powered by the Zionist forces aiming to establish a "settler community". This community assumed its own sovereignty independent of metropolitan country practices. This state was absolutely incompatible with native population and therefore needed to remove them to continue its own existence (Braverman, 2021). Browne, (2021) considers that the case of Palestinian occupation by the Zionist movement is similar to the settler colonialism of the Greeks in the Athenian clergy. This clearly involves the forced exile or elimination of the dominated population who were gradually replaced by the Zionists settlers. However, the settler colonialism in Palestine is somewhat different from settler colonialism in and Tasmania New England settler because Israel is continuously dependent upon support from external powers such as the USA as well as other Anglo-Saxon and French powers. These powers were either settler colonial states or had created settler colonial states in other parts of the world.</p>
  <p>The current situation in Gaza as well as the rest of Palestine is not mere issue of conflict between Hamas and Israel, instead it is a part of absolute ethnic cleansing. The latest war is an accelerated genocide process by Israeli settler colonialism under Zionist regime having complete support from the USA. Currently, Israel has launched a systematic process of carpet bombing in Gaza area, without protecting schools, hospitals, homes, and refugee camps. Based on these actions current situation is a clear attempt of racial dispossession and extinction (Natanel, 2023). Another evidence of this extinction effort is a leaflet by Israeli forces on November 16, 2023 which warned people in southern Gaza to either leave or be eliminated.&nbsp;</p>
  <p>Besides above, with recent attack by Hamas which triggered the war, Israel has strengthened its security narrative to justify the war. Israel continues to make a sustained effort to show what the tragedy was like when Hamas attacked Israel. They believe that the magnitude of the disaster has not been understood at the international level. The Government has launched a website with images of the horrors of the massacre (Medien, 2021). The government also invited authorities and media from the main world capitals to watch a video of the raw images of that massacre. They also conducted guided tours of international media to the agricultural communities where hundreds of civilians died in Hamas attack. All of these efforts are being made to propagate the security narrative of Israel to justify the war (Svirsky, 2021).&nbsp;</p>
  <p>The security narrative of Israel is focused on the central point that Hamas is a significant security threat which legitimises use of force. In purely military terms, the legal level of war could be considered as part of what Clausewitz calls friction. It is a set of factors that favour or hinder operations. The law can increase friction when there is conviction in relevant audiences of the illegitimacy of the operations, but it becomes a strategic asset when the perception of the local and international population that the operations are conducted legitimately (Khalidi, 2020). Meanwhile, it can also become a strategic asset of the enemy if the illegitimacy of the conduct of the war is perceived. It is a fact that laws are interpreted and even ignored or violated in conflicts. A true evolution in modern conflicts has occurred in the way in which the legitimacy of war and the violence that develops in it have come to be evaluated by both military and civilians in legal terms (Amira, 2021). Recognizing Israel's right to self-defence, the legal focus of the operation falls on the obligation to demonstrate the necessity and proportionality in the use of force, although the longer the duration of the operations the shift of the focus of attention is directed towards proportionality aspects. The legitimacy of the measures taken in Operation Iron Sword by Israel depends on their consistency with international law (Pycińska, 2023).</p>
  <p>Since the beginning of the century, there has been discussion about the lack of trust, relevance and credibility of international law to provide the legal framework in current conflicts, a fact recognized even by its main defenders. While accepting its imperfection, advocates argue that international law is equipped to address the normative needs of modern conflicts. They, even recognizing their need to adapt, consider it wrong to assume their lack of capacity and efficiency, considering that references to the alleged lack of adequacy, in many cases would hide excuses for their violation (Barghouti, 2021). Within this context it can be fairly assumed that Israel is now hiding its settler colonialism agenda and actions behind the attack of Hamas and is using the recent attack as a justified security concern. Thus it can be inferred that Israel has used security concerns as a means to facilitate racialised dispossession and settler colonialism in Gaza (Seidel, 2021).&nbsp;</p>
  <p>However, Israel&rsquo;s has already been taking actions under the security narrative prior to latest Hamas attacks. Consider for example, the case of &lsquo;apartheid wall&rsquo;. The construction of the wall started around two decades ago. This wall was a clear violation of international law by Israel and quickly became a controversy known as the "apartheid wall". The wall alienates several Palestinian communities from their farmland and agricultural fields. It adds misery and obstacles to economic development and food security of Palestinians (Alakhras, Ariffin, and Tumin, 2022). The main defence of Israel for the construction of the wall was that it was for the security of Jewish people. However, serious questions were raised on this narrative because the wall did not improve security of Jewish population and merely increased problems for Palestinians, causing mass migration and displacement of Palestinians from the surrounding areas. The construction of the wall is also a strategic move to displace Palestinians and reflects racialised dispossession (Todorova, 2021).&nbsp;</p>
  <p>The wall had a severe impact on economy of Palestine. Majority of the workforce in these areas were forced to seek employment under Jewish people or somewhere else. The level of unemployment in the West Bank increased to 25% and continued for several years. The wages paid to Palestinian workers who were working there was much less than Jewish workers. Many Palestinian crossed the wall to work in Israel, avoiding the police and other security personnel and were forced to work under extremely poor conditions. They could not even risk to go back home in dangerous conditions (Shihade, 2023). The wall was declared illegal by the International Court of Justice (ICJ) in 2004. The ICJ also asked Israel to compensate people for the damages caused by construction of the wall. Despite efforts by the UN General Assembly to force Israel to comply with ruling, there has been no progress. The vote by the UN member states clearly declared that they would not recognize the situation and Israel would not gain any support from the UN (Bishara, 2021). Therefore, it can be inferred that a security narrative has been taken by settler&rsquo;s colonialism project of Israel against Palestine. This case study reflects the national security narrative but there are also other forms of security narratives which are discussed in following case studies.</p>
  <h3>Case Study 2: Mayan Forest: Conservation, Green Wars, and Racialized Dispossession</h3>
  <p>Political ecologists have widely demonstrated that conservation leaves &ldquo;winners and losers&rdquo;, where the losers are often rural, indigenous and poor people. The territorial relations of the Q'eqchi' of the lowlands have been marked by their resistance against dispossession by foreign western armies including Spanish and Germans who previously invaded this area for transnational capitalist objectives (Penados, Gahman, and Smith, 2023). Marxian analysis frequently labels dispossession as a process that alienates local peasants from their land, also called primitive accumulation. This is a historical process repeated over almost all parts in the world at different scales. This term is also applicable in case of protected areas. Some political ecologists name this process as &ldquo;land grabbing&rdquo; where by large scale displacement of local rural peasants is achieved in different cases around the world. They are trying to exclude these cases as colonial settlers. However, the formation of protected areas as conservation of nature has very clear similarities with primitive accumulation process (Mass&eacute; and Lunstrum, 2016). It clearly reflects how settlers treat indigenous population and undertake dispossession process. After decolonisation, some states have displaced remaining indigenous population from their lands with the narrative that there are a security threat to nature (Andersson, 2021). The main security narrative in this context is that indigenous people are a threat to local environment and ecosystem. There are also other aspects to this narrative such as urban development but this case study is focused on using conservation of nature and considering indigenous people as a threat to nature.</p>
  <p>According to Bresnihan and Millner, (2022) Marx's analysis of dispossession of indigenous population in colonies constituted primitive accumulation yet Bresnihan and Millner posited that primitive accumulation can also be applied in case of dispossession by non-capitalist forces such as states. For example, Q'eqchi' communities believe that their land is a part of their identity and is not limited to productive activities. They believe that their land has a spiritual relationship with the community and is not limited to farming. For Q'eqchi' the land is a part of the tzuultaq'a (it is the spirit that permits Q'eqchi' to work and live off the land). Thus, the tzuultaq'a as a part of indigenous identity is an important factor of life of indigenous people. In this sense, that relationship is both spiritual and political. Beyond primitive accumulation, racialized dispossession seeks to alienate communities and produce a negative identity (i.e. Native, as opposed to the dominant non-Native society). In contrast, Q'eqchi' land defenders protest state violence while imagining their relationships with the land beyond an oppositional identity (Herlihy, Fahrenbruch, and Tappan, 2021).</p>
  <p>Guatemala's protected area system seems to employ a colonizing logic of elimination. This form of analysis of indigenous studies allows us to think of settler colonialism as a geographical imaginary (Walter, 2023). In other words, a territorial project that causes the elimination of indigenous people is similar to settler colonialism. Scholars of Indigenous research have highlighted that there is severe lack of accountability and transparency and high level of obscurity in the international treaties formed by Western powers in post-colonial territories (Speed, 2019). These liberal forces have acknowledged and recognised indigenous communities based on two foundational notions. The first is individual citizenship rights and the second is group ethnicity.</p>
  <p>As per the individual citizenship rights, the liberal states must form a relationship with indigenous communities as citizens of the nation and not an imagined community. They have individual rights like any other citizen of the nation such as political support for their survival and identity (Rose, 2020). However, in case of the Q'eqchi' Mayans, the notion of justice different as compared to notion of justice in the universal rule of law. They do not believe in equal treatment of all individuals but they believe in honouring relationships with the tzuultaq'a, the family and the entire community (Isla, 2022). In contrast, the liberals posit that equal protection is essential because of the history of oppression and marginality. They do not consider communities as individuals. Due to this narrow view the liberals fail to accommodate indigenous rights to collective self-determination and freedom. In fact, the position of Q'eqchi' is that neither the Kaxlan nor their State have authority over the land, but rather the Tzuultaq'a. It is through asking permission from tzuultaq'a and remaining in appropriate relationships between human and non-human beings that the Q'eqchi' have territorial rights (Casertano, 2022). Hence, by forced displacement and declaring their lands as protective areas or national parks, the states are violating their fundamental rights.</p>
  <p>Secondly, the liberal state are treating indigenous communities as minority groups who have competing and conflicting interests. This is also a mistake. According to Kartal, (2022) the Mexican elites during colonial era gained privileged citizenships and helped in reducing indigenous populations. They attempted to eliminate cultural differences with indigenous people and integrate them all into a national Mexican character, an ethnic variation. But indigenous people continued to produce and reproduce their individual identities in terms of unique ways in using territorial spaces. This example clearly explains that individual identities must be respected and indigenous people have a right to use their ancestral lands without any obligation to follow states restrictions. Any attempt by states to restrict the use of land is similar to settler colonialism.</p>
  <p>Rather than questioning liberal notions of poor people deserving or not deserving, Kartal, (2022) reminds us that indigenous difference manifests itself in the practice of space, including individualized conceptions of property relations. Therefore, it can be argued that the projects of conservation of lands as national parks and reacting to resistance through military actions is similar to primitive accumulation process in settler colonialism. Hence, states declaring protected areas are similar to colonial settlers who separated indigenous people from their lands forcibly for their own interests. By racializing indigenous peoples, the liberal state seeks to erase the articulation of indigenous identity through a relationship with the land, rather than presenting the romanticized image of a native totally removed from civilization who must be sedentary to be authentic (Curley, et al., 2022). Therefore, the main argument here is that the Q'eqchi' have ontologies that are different from the ontologies of the colonizing State, and therefore from their "rule of law". Their relationship with land is different as compared to relationship between land and citizen in liberal states. Hence, when the state registers a territory as National Registry without the consent of its indigenous occupants, the state is carrying out an act of epistemic violence.</p>
  <p>There are multiple ownership regimes in the current Mayan Forest. These include protected areas owned by states, forestry cooperatives owned by communities, and private ownership. Due to multiple ownership regimes there is no possibility to apply collective self-determination while seeking territorial management. There is also the fact that due to loss faced by the war indigenous peoples are claiming individual compensation and also deserve development assistance, yet they are marginalised and lack balance of power. Hence the framework does not achieve just distribution of land leading to primitive accumulation (Whitehead, 2022). There is also option for indigenous peoples to participate in the decision making but they cannot invoke the right to sovereignty. That is, they can seek recognition from the liberal State without recognizing themselves as individuals. The Q'eqchi' continue to struggle in current legal structure to gain collective self-determination. For this reason, it is fair to insist on calling them &ldquo;defenders&rdquo; of territorial rights (against state as settler colonial power), and not individual activists (Grandia, 2023).</p>
  <h3>Case study 3: Dispossession of Maasai in Tanzania in the name of conservation&nbsp;</h3>
  <p>In the name of conservation, the Maasai community is also facing displacement and dispossession from their ancestral lands and livelihoods especially in northern Tanzania. This case study traces the origins of this dispossession to the current struggles, which demand international solidarity for the Maasai. It is estimated that 50 percent of the world's protected areas are those that were traditionally occupied by indigenous communities (Weldemichel, 2022). While today the Serengeti National Park is quite familiar across the globe because it evokes images of iconic acacia trees, savannah landscapes, and the great wildebeest migration; for several centuries this park has been home to pastoralist&rsquo;s communities, one of the major among which is the indigenous Maasai. Although the Maasai in Northern Tanzania have been coexisting and caring for the park territory, around 80 years ago they were declared to be a threat to the land and its sustainability. Since then they are being forcibly resettled in other areas (Gissibl, 2016). They have suffered forced evictions, oppression, violence and marginalization; simply because the state has declared the territory as protected area (Bluwstein, 2021).&nbsp;</p>
  <p>In 1940, the British colonial government passed a Hunting Ordinance to support protection of wildlife in the Serengeti National Park. Although the law contained restrictions regarding the creation of human settlements in the region and the use of it, the people who were born and residing in the park were exempted from restrictions. Hence, initially the Maasai community was not affected by declaration of protected area. However, gradually the restrictions have increased pressuring the Maasai community to restrict its activities in the area. The pressure has been continuously increased by international conservation groups (Lunstrum &amp; Ybarra, 2018) such as the Zoological Society of Frankfurt and the International Union for Conservation of Nature (IUCN) (Suell, 2022).&nbsp;</p>
  <p>For example, in 1957, a British-led &ldquo;Inquiry Committee&rdquo; put forward the recommendation to create two divisions in the then Serengeti National Park. One of the divisions was what we call the current Serengeti National Park. This division restricted all forms of human settlement in the division, even by the Maasai. The second division is now known as the Ngorongoro Conservation Area (NCA) allowed multiple forms of land use with only three restrictions: a) no compromise on conservation of natural resources, b) ensure protection of indigenous groups and c) encourage tourism in NCA (Bluwstein, 2021).&nbsp;</p>
  <p>However, for the enforcement of these restrictions, the colonial government had to force the Maasai, residing in the area for centuries, to dislocate and resettle. The state told them that in exchange for displacement, the Maasai could inhabit another newly formed NCA. They were also promised that they would get better water resources. However, these promises were never realised even after the Maasai communities left their ancestral lands the British colonialists did not fulfil the promises (Bluwstein, 2022).&nbsp;</p>
  <p>Later the international conservation organizations increased their efforts and gained more control in the Serengeti region. During early 1960s, the fears of the African independence ending colonialism increased the risk of ending conservation projects. Hence the international conservation organisations increased the propaganda that global wildlife, and fauna and flora in Africa were in dire need to protection and assistance (Laltaika and Askew, 2021). As per the propaganda agenda that the great and unique resources of flora and fauna could be depleted simply because the indigenous peoples did not have adequate methods to obtain the maximum economic and cultural benefits from them and that indigenous ways were destructive (Ashaba, 2021). The groups therefore pushed for more restrictions on human activities such as cultivation and grazing in the NCA which further reduced control of Maasai community. They faced various penalties for the traditional activities including fines, confiscation of Maasai property, and even imprisonment (Kurajian, 2022). Consequently, the Maasai community started to leave the area.</p>
  <p>The conservation groups gained more victories in 1970s. A band was introduced in the Wildlife Conservation Act of 1974 on livestock grazing in game reserves. The game areas were large areas dedicated for hunting wild animals for sport. These restrictions further marginalized the Maasai communities. A year later the NCA Amendment Ordinance of 1975 put ban on all types of farming in the NCA. It was a severe negative blow on the Maasai, as they were dependent on agriculture and livestock as livelihood for centuries. Hence, their survival in the areas was jeopardised (Cavanagh, Weldemichel, and Benjaminsen, 2020).&nbsp;</p>
  <p>Again in 1979, the NCA was classified as a UNESCO World Heritage Site without consultation and consent from the Maasai due to increased pressure from conservation groups. All of these actions continued to marginalize the Maasai community and nobody voiced their suffering. As a result there was wide scale starvation among the Maasai followed by high level of mortality rates (Bluwstein, 2021). Hence, the state has been continuously undertaking measures that, although are not similar to violent military actions as in settler colonialism, but have same results i.e. displacement and extinction of indigenous people.</p>
  <p>When the UNESCO designated the Ngorongoro region as world heritage site in 2010, due to continuous pressure from conservation groups and international organizations, the UNESCO failed to carry out any form of negotiation or consultation with Maasai community, despite acknowledging them as free indigenous people in the areas. Mugambi, (2022) in review of literature cited William Olenasha who concluded that the only legacy of UNESCO, IUCN, and other organizations in Africa is the disaster they have created for the Maasai.&nbsp;</p>
  <p>The Tanzanian government has also continued the colonial legacy of marginalizing the Maasai, refusing to identify them as indigenous, continually passing laws that harm them, and carrying out numerous cases of violent eviction from Maasai villages in recent years. A recent evictions of Maasai people happened in August 2017 causing damage to 5,800 homes and leaving 20,000 Maasai homeless (Marchant, 2022). Following it Maasai people took brave steps and in September 2017 filed a case against Tanzanian government in the East African Court of Justice (EACJ). They have claimed to protect their right to their lands once and for all. There have been positive news in the form of recent injunctions by the EACJ but ground reports indicate that the government is not respecting the injunctions and violations and harm to Maasai people continue (Stith, 2020).&nbsp;</p>
  <p>Besides the state actions, the commercial sector, particularly the tourism sector has also taken steps that adversely affect the Maasai communities. The safari tourism companies are important in the Tourism sector which accounts for 17.5 percent of GDP of Tanzania and earn 25 percent of foreign currency earnings (2016/17) having significant power in the country. A recent report by the Oakland Institute, safari companies have caused significant negative impacts on the Maasai (Kimaro and Hughes, 2023). Some of the accusations made against the two companies concern that they have denied the Maasai access to vital grazing areas and water wells. In addition, the police has also been involved in injustice towards the Maasai. There have been reports that private company guards collaborated with the police and conducted violent evictions of the Maasai communities (Colex, 2021).&nbsp;</p>
  <p>Similar displacement have been cited in various works such as Limpopo National Park (LNP) in Mozambique cited by Lunstrum &amp; Ybarra, (2018) who termed this phenomenon as conservation-induced displacement (CID) and define the process of displacement as displacement in the name of ecological protection.&nbsp;</p>
  <p>Overall, it can be inferred that the efforts for so called conservation are similar to the actions of displacement and dispossession of settler colonialism in case of the Maasai. The conservation groups in collaboration with state and international organisations continue to impose restrictions on livelihood of Maasai people particularly on cultivation and grazing. This simply means that Maasai are facing malnutrition and hunger in near future. The evictions also continue with violent action such as intimidation and harassment not only by the state but also by private companies. The government also take actions against protesters. On the other hand, over a million tourists visit these areas for entertainment, the same areas that have been protected by the Maasai for centuries as an integral part of their life.&nbsp;</p>
  <p>According to Benjaminsen, et al., (2021) the tragedy faced by the Maasai people is no different from their indigenous counterparts in colonial era, although the Maasai are facing different strategies for dispossession by different actions. Victoria Tauli-Corpuz, a United Nations Special Rapporteur on the Rights of Indigenous Peoples noted that for more than a century, in the name of conservation, initiatives were carried out to eliminate all human presence in protected areas. Consequently, there has been massive destruction of cultural values due to large-scale displacement of indigenous communities. The responsibility of this tragedy is upon conservation organizations, UNESCO, governments, and, tourism companies (S&egrave;ne, 2023).</p>
  <h2>Conclusions</h2>
  <p>Based on discussion above there is clear evidence that colonial settlers have shown significant violation of basic rights of indigenous population across different parts of the world. In case of Palestine, Israel has been using violent military actions against Palestinian population in the name of national security agenda. The recent war is a clear and classic example of colonial settler. On the other hand, previous colonies such as Africa and Latin America show that in the name of conservation, colonial settler&rsquo;s traditions continue to promote dispossession of indigenous people (Asiyanbi, 2016). The main agenda in these case studies is to conserve natural resources particularly forests, however, there are extreme violations of rights of indigenous people.&nbsp;</p>
  <p>Conservation and decolonization in cases such as the Mayan Forest presents strategies, forms and variations on how the policy of protected areas also represents the continuity of the war against indigenous communities. While the effects of conservationist policies deepen, as a form of dispossession, there are no significant actions to protect these indigenous communities and their diverse cultures and traditions. Finally, it is important to highlight that during colonial period various communities particularly those who did not belong to so called &lsquo;civilised world&rsquo; have suffered a great deal as colonizers pursued self-interests. However, even after decolonisation, the traditions and corollaries of colonial settlers continue to haunt indigenous populations. There is a need for international community to revise their agenda and include survival of indigenous communities, their identities, cultures, and traditions as a part of global sustainable development agenda.&nbsp;</p>
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meta_description:
  The indigenous population of the Americas faced appalling treatment in the plantation areas colonised by Europeans, even though they were created for export trade exclusively.


slug: reflections
title: Reflections
academic_level: Graduate
subject: Law
type_of_paper: Essay
citation_style: APA
meta_title: Reflections
meta_keywords: natural law and legal positivism
canonical_url: https://www.cheap-essay-writing.co.uk/
meta_robots: index,follow
created_at: 2025-06-24 12:14:05
updated_at: 2026-01-14 15:45:51
status: published
content:
  <h2>Workshop Reflection 1: Natural Law and Legal Positivism</h2>
  <p>By looking into parliamentary changes in the UK in the 1960s, my study of the argument between Natural law and Legal Positivism proved to be a very intricate and complex issue of morality, law and the parliamentary role. The process of making choices between two contrasting advisories, of natural law which puts more emphasis on invariable moral writings and positive law which is more of legislative superiority and mandatory rule has been exhilarating. Through exploration of the impact of legislative changes aimed at restricting contraception, suicide, abortion and homosexuality on Natural Law, I realized that firstly I could illustrate how Natural Law proponents would criticize Parliament's role in shaping morality, while, secondly, I could emphasize the significance of Parliament as a source of authority in the legal positivist context. By scrutiny of every bit of legislative change from two perspectives of Natural Law and Legal Positivism, I unveiled the layers of their implementation. Both the ways have significant meanings I just discovered.&nbsp;</p>
  <p>Further, the analysis and the argumentation part made me examine the subtleties intrinsic to handling the dilemmas that arise within the parliamentary prerogative and above the ethical bylines. It accentuated the pragmatism of the wording of the connection between legislative authority, moral guidelines and constitutional provision. Consequently, the coexistence of parliament supremacy along with the challenge of joining the discrepancies is emphasized. In summary, this experience highlighted the centrality of the role of maintaining a balance between different perspectives in the legal framework, which provides the principle of justice, the legality of institutions, as well as accountability. My self-reflection on this occasion has engendered thoughts regarding the complexities of race, gender, and the inequalities cemented within the criminal justice system's framework, which by and large, illustrates the contemporary societal dialogues' utter relevance.</p>
  <h2>Workshop Reflection 2: Judicial Law-making</h2>
  <p>The work on Lord Mansfield's contribution towards judicial law-making and its effect on the development of Commercial Law remained crucial to fostering my learning. My perspective regarding the interplay between judicial decision-making, legal precedent, and the legal structure as a whole underwent expansion and was clarified after undertaking the project and conducting research and analysis in the Mansfield story. One of the most notable outcomes of my investigation on Lord Mansfield's style of adjudicating revealed the need for pragmatism and adaptability during the judicial process. The real need for the legal system to be responsive to the ever-evolving situations of society and the reality of trade informs Mansfield's efforts for the application of practicality and efficiency in resolving commercial cases. His ability to be lenient in a methodical and formal process of an indictment system and emphasize the necessity of the influence of judicial discretion in the domination of justice is a good example.&nbsp;</p>
  <p>Moreover, Mansfield's endeavours to ensure the integrity of Commercial transactions, assets and practices contributed a lot just as principles of Commerce Jurisprudence had been conceived. Significant emphasis on the importance of the economic contribution of coherent and mandatory legal rules catches the eye of the market participants as now taking part in the ever-growing discussions between the regulators and the managers. Mansfield's role points to the timeless nature of the values of the rule of law that would ensure order as well as the fairness, transparency, and certainty that support a business-friendly environment. The other side of the coin, though, was that it turned out to be more of a hurdle for me, more than anything else, to cope with rather intricate doctrines and past contexts.&nbsp;</p>
  <p>Furthermore, acquiring the proficiency to discern what character made those choices involved chasing clues, embracing law principles, and knowing the historical norms of 18th-century people. As well as interpreting his jurisprudence to fit the context of our world which changes and develops daily requires intricate and competent analysis. Even with all these difficulties, interacting with Lord Mansfield's philosophical jurisprudence and what it generated in the direction of Commercial Law gave important lessons as seen the law being changed with the existing circumstances as well.</p>
  <p>This revealed to me that the relationship between judicial law-making, statutory interpretation, and societal norms have to play some leading roles for the framework guiding society to be in good shape. In a nutshell, it deserves mentioning that penning the essay about Lord Mansfield's role in the development of Commercial Law was a good experience and it allowed me to improve my knowledge about Legal History and Jurisprudence. Through the experience of analysing Mansfield's practical approach as well as his recognition of justice, I imagine these ideas to remain my guiding principles as I encounter and explore more current legal challenges in the evolution of Commercial Law.</p>
  <h2>Workshop Reflection 3: Civil Justice/Access Justice</h2>
  <p>In my work on civil justice, I tried to look at the civil justice system and also examine the occasions like UNISON v. Lord Chancellor case, on the one hand, it was also cognitively demanding. I also gained a deeper grasp of a variety of essential concepts and principles of access to justice, the significance of procedural fairness and efficiency, and the ripple effects of domestic significant legal rulings on society. A considerable lesson gathered here is that access to justice is a fundamental issue, where the rule of law can be upheld and the equal in front of the law can appear. Under UNISON v. Lord Chancellor, I obtained a higher level of awareness relating to how barriers to courts might just jeopardize the sole values of equality, justice, and fairness that institute democratic societies. It was obvious that the civil justice system was increasingly important as the way for individuals to have justice, which by holding the state obligatory helped to maintain the social justice order.&nbsp;</p>
  <p>From a broader perspective, I believe that being familiar with the civil justice system components and functions yielded a bit more complex view of the network of different institutions and procedures that deal with justice administration. On the other hand, I met numerous times with difficulties comprehending the legal concepts at hand and the court decisions, especially decoding the legal terminology and the occasion that occurred during the historical period under review. My struggle with understanding the subtleties of legal rules and their implications in real life led to my carefulness towards analytical skills. On the other hand, blending divergent standpoints and legal claims became one of the tasks that proved to be a true challenge in assisting to build a storyline which in turn was supposed to demonstrate the complex nature of the civil legal system.&nbsp;</p>
  <p>The conjunction of the theory of the law with the practice of real-life examples constituted a balancing act, which could be done well only if a profound way of explanation was used. In wrap-up, the civil justice system studying interlude has intellectually dragged the wax wings of my mind and provided me with the necessary information about the mechanisms that make justice equally applicable to all citizens of a country. Although there still definitely are complexities and challenges in legal thinking, the chance for me to explore the ideas more deeply as far as principles of justice and accountability are concerned is truly precious.</p>

meta_description:
  The argument between Natural law and Legal Positivism proved to be a very intricate and complex issue of morality, law and the parliamentary role.


slug: victim-support
title: Victim Support
academic_level: Undergraduate
subject: Sociology
type_of_paper: Report
citation_style: APA
meta_title: Victim Support
meta_keywords: victim support
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created_at: 2025-06-24 12:30:53
updated_at: 2026-01-14 15:45:41
status: published
content:
  <p>[Student ID]</p>
  <p>[Name of the Institution]</p>
  <p>[Date of Submission]</p>
  <h2>1. Introduction</h2>
  <p>Victimisation has a variety of repercussions on victims, such as on their mental and physical health, opportunities for job or further education, money, and overall well-being. However, not everyone is impacted by crime in the same manner (Jonathan et al., 2021). Numerous factors affect how much of an impact there is on the victim, and some data suggests that the crime and event severity are not the only elements that account for this difference (Long, 2021). Other considerations are the victim's traits, financial situation, and the availability of assistance (Stripe, 2020). Victims may require different things in order to cope and heal from the crime. The quantity and kind of necessary demands might vary depending on the incident's and the victim's unique qualities, even though many victims have many of the same needs.&nbsp;</p>
  <p>This research mainly focusses on discussing the theoretical aspects of victim support and the different dimensions where these elements exist. Moreover, the study also aims to discuss the impact of victim support initiatives taken in the educational intuitions.&nbsp;</p>
  <h2>2. Key Distinctions between Crime and Deviance&nbsp;</h2>
  <p>Crimes are offenses that are done in the public domain; the state authorities penalize these. From a common person to a high-profile individual, incidents of intentional or unintentional crimes are widespread, and they differ in type. With respect to the Merriam-Webster dictionary's definition, 'deviant' is 'the one who is deviating or straying, especially from common rules or regulations'. According to the definition provided by the sociology, deviance is any conduct that is out of line and truly not considered as the norm (van de Ven, 2020). Take a group of people in the public place who are wildly playing loud music and drinking.&nbsp;</p>
  <p>Crime is deviance but not everything deviant is crime. The transgressions can be referred to as violations to the promoted socialising and moral norms. Therefore, for this purpose, there will not be everyone who undertake to what is went beyond the limit behaviour (Lantz and Wenger, 2022). The fact that the social and moral values of individual people and various cultural groups are diverse is true. Whenever some act or behaviour is considered deviant, it depends on the context in which this act or behaviour has been committed. This concept deals with the notion that there are many behaviours, which may be deemed abnormal in some societies or cultures or splintered from a widespread standard of morality or historical context.</p>
  <h2>3. Different Dimensions of Crime and its Impact on Victim Support</h2>
  <h3>3.1 Social Dimensions</h3>
  <p>Social elements are a vital part of the crime process as well as consequences experienced by the victims. Different social theories are useful for the researchers to construct the models of such a phenomenon and offer the best solutions.</p>
  <h4>3.1.1 Social Inequality</h4>
  <p>According to Merton Strain Theory, people feel the strain of social and economic inequality may change from one of the functions to another which may increase the potential for crime (Bailey et al., 2020). For example, youngsters, who come from places where there may high rate of violence and crime, may be easy to steal from or assaulted as compared to those who live in secure and wealth areas.</p>
  <p>In terms of this theory, crime victim advocates and support agencies can emphasise helping clients to social status levelling for reduction of the chance of becoming crime victims being themselves (Bailey et al., 2020). For instance, the services help those victims to get better employment and may go further and help them to enrol universities. Eventually, these people can do this to them, and society will accept them full- time workers, not the criminals.</p>
  <p>This may be illustrated by the Ministry of Justice's employment enhancing "Empowerment" program launched with the purpose of helping victims of crime secure appropriate job openings (Quintas and Sousa, 2021). Parts of this project avails vital skills for employment and even provide them with opportunities to further their education, fostering economic independence and reducing social assistance dependency.</p>
  <h4>3.1.2 Social Learning</h4>
  <p>According to the Social Learning Theory, which was proposed by Albert Bandura, criminal behaviour is merely imitated through the interaction process (Akdemir and Lawless, 2020). Those who have exposure to communities that seem to be rife with violence and crime fighting are more likely to get used to such scenarios and even perceive violence as acceptable. Hence, victim support services that run under this concept can provide programs that help in the procedure that boost the feelings of safety and sense of community ownership (Holliday et al., 2020). Another example of these services can be mentoring programs for youth, belonging events which offer people a chance to have fun by building positive relationships, or volunteering which allows victims to participate in community-oriented projects such as improving the environment (OBIDIMMA et al., 2023). To illustrate this, the "Friends Club" program devised by the "Charitable organization "Noor"" in the United Arab Emirates is stated.&nbsp;</p>
  <p>This program offers a resort for children under domestic violence to enjoy proportional space for plays and friendships with their peers through the platform (van de Ven, 2020). The program using interesting and informative activities performs their task by making the children create an atmosphere of mutual understanding and acquire healthy coping mechanisms that can minimise the future involvement in offensive behaviour.</p>
  <h4>3.1.3 Marginalization and Stigmatization&nbsp;</h4>
  <p>Applying the Labelling Theory, a study by Howard Becker pinpoints at the difficulty of the crimes made not by the victims' own will and the labelling them with shame afterward (Bailey et al., 2020). Also, sexual harassment can ultimately tarnish the sufferers&rsquo; reputation because of their clothes or behaviour, hence making them fearful of enquiry. This leads to reluctance to seek for help.</p>
  <p>Thus, according to this theory, victim support services are centred on psychological support of the victims and approval of their experiences (Quintas and Sousa, 2021). It is through the provision of these services that victims are able to fight against the prejudice imposed on them and protect their rights as they seek to uphold social and legal justice.</p>
  <p>Lebanese organization "Fayruz" comes under this not very uncommon example as they provide legal and psychological support to those who are victims to domestic violence (Holliday et al., 2020). The community-based agency seeks to modify the public opinion on victims of domestic violence by saying that the victim has never deserved what happened to them. Furthermore, the association offers legal consultations through which victims can take further legal steps to pursue action against their abusers and exercise their legal rights.</p>
  <h3>3.2 Economic Dimensions</h3>
  <p>The economic tragedy for story victims is enormous and far-ranging. The failure to wrap one&rsquo;s head around economic structure repercussions of the criminals can mount up to the poor design of victim aid systems.</p>
  <h4>3.2.1 Financial Strain</h4>
  <p>Crime boxes like robbery, theft or property damage can cause emotional or mental appreciable losses to those victimized financially. This crisis like losses might either create a fiscal crisis for low-income families or occur immediately in the lives of the same category of people (Akdemir and Lawless, 2020). However, the long-term effect can similarly be crushing, with victims being pushed deep into debt or just managing to survive difficult basic necessities. The cost associated with the lost wages accruing from the inability to continue working due to the injury or longer time spent recovering after the crime can also be high.</p>
  <p>Through the offering of victim support services, it is possible to reduce the amount of financial burden, particularly on people who are not involved in this traumatic event (Powell et al., 2020). On the other hand, monetary help, budgeting courses or law aid occur to be quite helpful in the short-term, as well as for coping up with the long-term financial demands. Also, support might be provided if the victim wants to process insurance loss claims in order to accurately estimate the required compensations.</p>
  <h4>3.2.2 Job Loss after Crime</h4>
  <p>Crime diminishes a prospect to build a career, or financial assets more often than it does. Physical injuries caused by crime can disable the victim from returning to employment as soon as they can. In fact, they can suffer long-term disability which significantly lowers their skill level in the workplace (OBIDIMMA et al., 2023). The emotional trauma after crime can be seen as anxiety, depression, and thinking gap, which impair person's productivity. Safety worries, especially if the crime took place in their workplace &ndash; the place where they must feel like they cannot go there &ndash; will be their concerns.&nbsp;</p>
  <p>Even false accusations can lead to job which may result in loss of the job or at least movement of them for the period of time when the trials are being held (Visconti, 2020). Besides the negative exposure and the emotional effects around such cases, the system takes longer to heal, and the affected individual might even decide to quit the same working environment. Here, aggregates labeling theory which underscores the possibility of the social labels that could adversely affect the personal growth and life opportunities of the person. Carrying the title of "a victim" - even in rare occasions of being falsely accused can lead to stigma and discrimination whilst in the workplace.</p>
  <p>3.3 Cultural Dimensions</p>
  <h4>3.3.1 Cultural Relativism and Victim Blaming</h4>
  <p>Cultural dimensions play a crucial role in shaping perceptions of crime and victim support within societies. Cultural relativism, as a theoretical perspective, underscores the significance of understanding behaviors within their cultural context rather than imposing external standards of judgment (Lantz and Wenger, 2022). This viewpoint denotes crimes or deviations in one community, and which could be normal or rather accepted in another area. Moreover, the cultural perspective should not be overlooked in the study of victim support. Through observed contrasts of how cultures address crime and victimization, it cannot be denied that culture influences victim support.</p>
  <p>In an environment where blaming victims is a mainstream attitude, the societal norms and beliefs aggravate the trials the victims encounter as they reach out for support. Victims may be stigmatized, and this may lead to shyness to the point of being afraid to report a crime or looking for help (van de Ven, 2020). This fact shows the intricate role of the cultural ideas about victimization and the services availability when it comes to access for victims. A theoretical viewpoint of this issue begins with the exploration of the impact of culture&rsquo;s dimensions on victim help and an analysis of different approaches to crime and deviance. For instance, label theory tells us that society reacts to an individual's behaviour which becomes the foundation of one's self-concept and future behaviour (Stripe, 2020). Diversity of cultures may a radical difference in labelling theory: as a result, victim is treated with different eyes in the community. Aside from routine situation theory, which underscores the importance of opportunity in criminal behaviour, the researcher argue that situation leads to violent behaviours.&nbsp;</p>
  <p>3.3.2 Cultural Diversity and Access to Support Services</p>
  <p>Cultural dimension becomes especially important in helping to build and mould victims of crime and the perception of the society of individuals and events within a given society. Based on the concept of cultural relativism as the theoretical direction to be followed, it is obvious that the understanding of actions is in their cultural background rather than the application of external standards of judgment (Long, 2021). Such view makes a distinction which is that something that in one society considered a criminal activity or does not seem normal could be a default type of behaviour or even accepted in somewhere else.&nbsp;</p>
  <p>Apart from societies where victim blaming is dominant, cultural preferences and the existing beliefs are some of the issues that can add to the sufferings of the victims when they are seeking help (Jonathan et al., 2021). Offenders may suffer marginalization or exclusion, which incites complaints as well as reluctance for seeking help and reporting crimes. This is evidence when the affected persons who are blamed for their dressing or behaviour (Flores et al., 2022). Their healing process may be slowed down and they may feel somehow discouraged to seek help. The issue of choice of victimhood and its relationship to obtained support services is demonstrated herein. It is because of the intricate interaction of cultural perceptions and availability of services.</p>
  <p>Similarly, labelling theory postulates that society can have a broad impact on the intellectual yet emotional state of an individual upon perception of his or her actions (Leukfeldt et al., 2020). In a culturally diverse setting, labelling theory might not follow the same structure, thus the way victims are perceived and treated by their communities might be significantly different. Just like the routine activities theory which suggests that the considerably higher opportunities of criminal behaviour exist, there are various routines that ordinary people perform on a daily basis.&nbsp;</p>
  <h2>4. Impact of Victim Support on Institutions</h2>
  <p>The consequences of victims&rsquo; services on criminal justice system institutions have multi-faceted and complicated nature, which can be relatively well understood under different theory approaches (Diaconu, 2022). Another view of this is social disorganization theory, which says that crime and social distress rise in places where the social ties are weak, and establishments are not working effectively. It should be noted here that exceptional victim aid facilities can help in the realization of social order through development of mechanisms to cater for the needs of those threatened or exposed to crimes and deviations.</p>
  <h3>4.1 Effectiveness of Law Enforcement Agencies<br><br></h3>
  <p>The impact of the victim assistance measures is not underrated as the improve efficiency of the law enforcement by increasing trust between victims and the public authorities. Taking care of all-encompassing support services by arranging for assault reporting and legal procedure navigating in addition to, obviously, can raise the level of the involvement by the victims in law enforcement activities. According to strain theory from a theoretical viewpoint, an individual may engage in criminal behaviour as a result of a delusion when s/he perceives that his/her society's goal and his/her means of attaining such goals are different from each other (Anderez et al., 2021).&nbsp;</p>
  <h3>4.2 Functioning of Judicial Institutions</h3>
  <p>In addition to this, victim support programs influence judicial institutions by functioning as an advocator, that is, a member who articulates the rights and interests of the victim during these legal proceedings. Therefore, this activist position matches the philosophy of restorative justice as it emphasizes how you can deal with criminal damage cause through the processes of dialogue, reconciliation, and reparation. The subject in labelling theory, is, that, it acquainted society&rsquo;s perception of a person&rsquo;s behaviour, to the reactions taking place (De Kimpe et al., 2020).&nbsp;</p>
  <h3>4.3 Impact on Community-Based Organizations</h3>
  <p>An array of community organizations that participate in victim support services are not only significant but also critical players in the larger criminal justice system. These societies mostly work at the local level, providing individual service made using the best practices to handle the specific requirements (Gillespie et al., 2021). A victim support organisation which is from socio historical vices emerges as the society moves towards intricately kindness regarding crime and victimization, which is completely new.&nbsp;</p>
  <h2>Conclusion</h2>
  <p>Crime and Deviant theories have a deep understanding as to the cause of the crime which greatly raises the service delivery to victims. A holistic response of theoretical nature that is adaptable to victim&rsquo;s diverse perceptions and needs has been recognized as the most effective. Thus, now we must move forward through cooperation between victim support services, researchers, and policymakers. The future collaboration is key. Furthermore, practitioners can analyze victims' demographic characteristics, crime types, and service usage to make sure services are well focused on particular victim groups. The best way for victim support institutions to do so is to continue to amend and perfect their practices.</p>
  <h3>References</h3>
  <ul>
  <li>
  Akdemir, N. and Lawless, C.J., 2020. Exploring the human factor in cyber-enabled and cyber-dependent crime victimisation: A lifestyle routine activities approach. Internet Research, 30(6), pp.1665-1687.
  </li>
  <li>
  Anderez, D.O., Kanjo, E., Amnwar, A., Johnson, S. and Lucy, D., 2021. The rise of technology in crime prevention: Opportunities, challenges, and practitioners&rsquo; perspectives. arXiv preprint arXiv:2102.04204.
  </li>
  <li>
  Bailey, L., Harinam, V. and Ariel, B., 2020. Victims, offenders, and victim-offender overlaps of knife crime: A social network analysis approach using police records. PLoS one, 15(12), p.e0242621.
  </li>
  <li>
  De Kimpe, L., Ponnet, K., Walrave, M., Snaphaan, T., Pauwels, L. and Hardyns, W., 2020. Help, I need somebody: Examining the antecedents of social support seeking among cybercrime victims. Computers in human behaviour, 108, p.106310.
  </li>
  <li>
  Diaconu, N., 2022. Legal protection of victims of crime in the European Union. International Journal of Legal and Social Order, 1(1), pp.106-117.
  </li>
  <li>
  Flores, A.R., Stotzer, R.L., Meyer, I.H. and Langton, L.L., 2022. Hate crimes against LGBT people: National crime victimization survey, 2017-2019. PLoS one, 17(12), p.e0279363.
  </li>
  <li>
  Gillespie, L.K., King, L.L., Bostaph, L.G. and Goodson, A., 2021. Crime victim service providers&rsquo; needs and barriers: Rurality and &ldquo;high need.&rdquo; Journal of interpersonal violence, 36(15-16), pp.7274-7297.
  </li>
  <li>
  Holliday, C.N., Kahn, G., Thorpe, R.J., Shah, R., Hameeduddin, Z. and Decker, M.R., 2020. Racial/ethnic disparities in police reporting for partner violence in the National Crime Victimization Survey and survivor-led interpretation. Journal of racial and ethnic health disparities, 7, pp.468-480.
  </li>
  <li>
  Jonathan, O.E., Olusola, A.J., Bernadin, T.C.A. and Inoussa, T.M., 2021. Impacts of crime on socio-economic development. Mediterranean Journal of Social Sciences, 12(5), p.71.
  </li>
  <li>
  Lantz, B., and Wenger, M.R., 2022. Are Asian victims less likely to report hate crime victimization to the police? Implications for research and policy in the wake of the COVID-19 pandemic. Crime &amp; Delinquency, 68(8), pp.1292-1319.
  </li>
  <li>
  Leukfeldt, E.R., Nott&eacute;, R.J. and Malsch, M., 2020. Exploring the needs of victims of cyber-dependent and cyber-enabled crimes. Victims &amp; Offenders, 15(1), pp.60-77.
  </li>
  <li>
  Long, L.J., 2021. The ideal victim: A critical race theory (CRT) approach. International Review of Victimology, 27(3), pp.344-362.
  </li>
  <li>
  Obidimma, e., Anushiem, M.I. and Moedu, A., 2023. An appraisal of the rights of the victims of crime in the administration of criminal justice in Nigeria. International Review of Law and Jurisprudence (IRLJ), 5(3).
  </li>
  <li>
  Powell, A., Scott, A.J., Flynn, A. and Henry, N., 2020. Image-based sexual abuse: An international study of victims and perpetrators&ndash;A Summary Report.
  </li>
  <li>
  Quintas, J. and Sousa, P., 2021. Does a coordinated program between the police and prosecution services matter? The impacts on satisfaction and safety of domestic violence victims. Criminal justice policy review, 32(4), pp.331-351.
  </li>
  <li>
  Stripe, N., 2020. Domestic abuse in England and Wales overview: November 2020. London: Office for National Statistics.
  </li>
  <li>
  van de Ven, P., 2020. The journey of sensemaking and identity construction in the aftermath of trauma: Peer support as a vehicle for construction. Journal of community psychology, 48(6), pp.1825-1839.
  </li>
  <li>
  Visconti, G., 2020. Policy preferences after crime victimization: panel and survey evidence from Latin America. British Journal of Political Science, 50(4), pp.1481-1495.
  </li>
  </ul>

meta_description:
  This research mainly focusses on discussing the theoretical aspects of victim support and the different dimensions where these elements exist.


slug: investment-appraisal-report
title: Investment Appraisal Report
academic_level: Graduate
subject: Finance
type_of_paper: Assignment
citation_style: APA
meta_title: Investment Appraisal Report
meta_description: This report aims to analyse investment in the production plant and machinery.
meta_keywords: investment appraisal report
canonical_url: https://www.cheap-essay-writing.co.uk/
meta_robots: index,follow
created_at: 2025-06-24 12:53:20
updated_at: 2026-01-14 15:45:23
status: published
content:
  <p>[Name of Student]</p>
  <p>[Name of Professor]</p>
  <p>[Date of Submission]</p>
  <h2>Introduction</h2>
  <p>This report aims to conduct analysis of investment in the production plant and machinery. For this purpose, different techniques of the capital budgeting have been used which includes; the payback period, accounting rate of return (ARR), Net present value (NPV) and Internal rate of return (IRR). These techniques allow to analyse if the investment generates value for the firm or not and in how much time the initial investment could be recovered and what does it provides an average return. Furthermore, the potential impact of foreign exchange rate on the investment project has also been examined and alternate sources of finance are also discussed through which firm could finance the investment project. Meanwhile, other non-financial matters are also analysed that should be considered in the investment project.</p>
  <h2>Background</h2>
  <p>Herts Gadgets International plc is considering an investment into the new production plant and machinery for the product, and this investment requires an investment of &pound;13,000,000 as an initial investment and also requires another &pound;2,000,000 for the working capital. So, the total initial investment required is &pound;15,000,000 and life of the project would be 5 years only. The expected contribution from the new sales would be 2,865,000 annually for the next 5 years and it will also reduce the direct labour cost and direct material cost by 20%, thus an expected cost saving tend to be &pound;1,680,000 annually. This is case information that will be used to analyse the investment proposal of the company through using the different capital budgeting techniques.</p>
  <h2>Techniques Applied</h2>
  <p>In order to analyse the proposed investment project, different types of capital budgeting techniques have been used and discussion on these techniques is conducted in this section. The techniques applied are (1) Payback period (2) Discounted payback period (3) Accounting rate of return (ARR), (3) Net Present value (NPV), (4) Internal rate of return (IRR).</p>
  <h3>(1) Payback period&nbsp;</h3>
  <p>The first technique applied in this report is the payback period which explains total expected time the initial investment would be recovered from the project. In this technique, the expected future cash flows are used to calculate in how much time the investment initial would be recovered so in other words it provides break-even point in terms of time (Oktaviani, 2018). For instances, if a project has 5.5 years then it means that initial investment would be recovered in 5 years and months.</p>
  <h3>(2) Discounted payback period&nbsp;</h3>
  <p>The second technique applied in this report is the discounted payback period which also explains the total expected time in which initial investment would be recovered but in this technique discounted cash flows are used rather than cash flows only. This technique helps to overcome the limitation of payback which ignores the time value of money concept (Kuznetsov, 2016). However, discounted payback period considers the time value of money concept which makes it more effective and appropriate as compared to payback period alone.</p>
  <h3>(3) Accounting rate of return (ARR)</h3>
  <p>Accounting rate of return (ARR) is third technique applied in this report which tells an average rate of return that company could earn from the project annually over its life time (Magni, 2019). The application of this technique is used when multiple projects are compared with each other but it also has limitation that it does not consider the time value of money concept which may led to either acceptance of project which may not be attractive.</p>
  <h3>(4) Net Present value (NPV)&nbsp;</h3>
  <p>Net present value (NPV) is the fourth technique applied in this report, this technique is used to calculate how much value investment or project can provide after deduction of the initial investment and considering the concept of the time value of money. It enables to analyse overall profitability of the project over its life time (Baker and English, 2011). Hence, this technique is also used in the following report to determine how profitability of the investment that company has planned to undertake.</p>
  <h3>(5) Internal rate of return (IRR)</h3>
  <p>Internal rate of return (IRR) is fifth technique of the capital budgeting applied in this report. This technique allows to analyse the profitability potential of the investment and provides a discount rate at which NPV is zero, it is used to determine how much a return project tend to provide over its life cycle (Baker and English, 2011). Hence, it is mainly used for the purpose of the analysing multiple projects.</p>
  <h3>(6) Weighted average cost of capital (WACC)</h3>
  <p>Weighted average cost of capital (WACC) is last technique which was used in the project to calculate the discount rate for the firm considering its capital structure. Basically, WACC is the rate of return which investors expect from the firm and it is used to discount the cash flows of the project to calculate NPV of the project (Bierman and Smidt, 2012). One of strength of the WACC and also the core reason behind using WACC is that it provides average cost of capital after considering all types of sources of finance including debt, equity and also preferred shares. Hence, it was used as discount rate since the company had two types of sources of finance debt and equity based on which WACC was calculated.</p>
  <h2>Discussion of Findings</h2>
  <h3>(1) Payback period <br><br></h3>
  <p>Table 1 Payback period of the Investment</p>
  <div dir="ltr" align="left">
  <table><colgroup><col width="47"><col width="118"><col width="136"></colgroup>
  <tbody>
  <tr>
  <td colspan="3">
  <p>Payback Period</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>Year</p>
  </td>
  <td>
  <p>Cash Flow (&pound;)</p>
  </td>
  <td>
  <p>Cumulative CF (&pound;)</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>2021</p>
  </td>
  <td>
  <p>(15,000,000.00)</p>
  </td>
  <td>
  <p>(15,000,000.00)</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>2022</p>
  </td>
  <td>
  <p>2,865,000.00&nbsp;</p>
  </td>
  <td>
  <p>(12,135,000.00)</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>2023</p>
  </td>
  <td>
  <p>3,008,250.00&nbsp;</p>
  </td>
  <td>
  <p>(9,126,750.00)</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>2024</p>
  </td>
  <td>
  <p>3,158,662.50&nbsp;</p>
  </td>
  <td>
  <p>(5,968,087.50)</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>2025</p>
  </td>
  <td>
  <p>3,316,595.63&nbsp;</p>
  </td>
  <td>
  <p>(2,651,491.88)</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>2026</p>
  </td>
  <td>
  <p>3,482,425.41&nbsp;</p>
  </td>
  <td>&nbsp;</td>
  </tr>
  <tr>
  <td colspan="2">
  <p>Years</p>
  </td>
  <td>
  <p>4&nbsp;</p>
  </td>
  </tr>
  <tr>
  <td colspan="2">
  <p>Months</p>
  </td>
  <td>
  <p>0.8</p>
  </td>
  </tr>
  <tr>
  <td colspan="2">
  <p>Payback period</p>
  </td>
  <td>
  <p>4.8 Years</p>
  </td>
  </tr>
  </tbody>
  </table>
  </div>
  <p>The payback period of the investment is calculated through a typical formula as a year at which cash flow is negative but will turn positive next year. So, that year is considered to be year and remaining months are calculated by dividing the remaining amount to be recovered by cash flow of the next year and this provides approximate remaining time. So, the calculate payback period for the project is 4.8 years or it can be said that project will recover the initial investment approximately in 4.8 years fully.</p>
  <h3>(2) Discounted payback period&nbsp;</h3>
  <p>Table 2 Discounted Payback period</p>
  <div dir="ltr" align="left">
  <table><colgroup><col width="47"><col width="118"><col width="136"></colgroup>
  <tbody>
  <tr>
  <td colspan="3">
  <p>Payback Period</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>Year</p>
  </td>
  <td>
  <p>Cash Flow (&pound;)</p>
  </td>
  <td>
  <p>Cumulative CF (&pound;)</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>2021</p>
  </td>
  <td>
  <p>(15,000,000.00)</p>
  </td>
  <td>
  <p>(15,000,000.00)</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>2022</p>
  </td>
  <td>
  <p>3,705,939.93&nbsp;</p>
  </td>
  <td>
  <p>(11,294,060.07)</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>2023</p>
  </td>
  <td>
  <p>3,429,635.64&nbsp;</p>
  </td>
  <td>
  <p>(7,864,424.44)</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>2024</p>
  </td>
  <td>
  <p>3,175,785.22&nbsp;</p>
  </td>
  <td>
  <p>(4,688,639.21)</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>2025</p>
  </td>
  <td>
  <p>2,942,428.73&nbsp;</p>
  </td>
  <td>
  <p>(1,746,210.49)</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>2026</p>
  </td>
  <td>
  <p>3,911,223.05&nbsp;</p>
  </td>
  <td>&nbsp;</td>
  </tr>
  <tr>
  <td colspan="2">
  <p>Years</p>
  </td>
  <td>
  <p>4&nbsp;</p>
  </td>
  </tr>
  <tr>
  <td colspan="2">
  <p>Months</p>
  </td>
  <td>
  <p>0.6&nbsp;</p>
  </td>
  </tr>
  <tr>
  <td colspan="2">
  <p>Payback period</p>
  </td>
  <td>
  <p>4.6 Years</p>
  </td>
  </tr>
  </tbody>
  </table>
  </div>
  <p>The discounted payback period for the project is found to be 4.6 years approximately which shows that if discounted cash flows are used for the calculation of payback period, then approximately it will take 4.6 years to recover the initial investment. The discounted payback period is less than payback period which shows that project tend to be recover in lesser time when discounted cash flows are used and it also favourable.</p>
  <h3>(3) Accounting rate of return (ARR)</h3>
  <p>Table 3 Accounting Rate of Return (ARR) of the Investment</p>
  <div dir="ltr" align="left">
  <table><colgroup><col width="128"><col width="119"></colgroup>
  <tbody>
  <tr>
  <td colspan="2">
  <p>Accounting Rate of Return (ARR)</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>Average Return</p>
  </td>
  <td>
  <p>&pound;4,756,949.37&nbsp;</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>Initial Investment</p>
  </td>
  <td>
  <p>&pound;15,000,000.00&nbsp;</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>ARR</p>
  </td>
  <td>
  <p>31.7%</p>
  </td>
  </tr>
  </tbody>
  </table>
  </div>
  <p>The accounting rate of return of the investment is calculated by dividing the average return from the investment divided initial investment. The calculated accounting rate of return is 31.7% indicating that on average the investment will provide a return of 31.7% annually. However, it does not consider discounted cash flows which makes it a less effective technique (Baker and English, 2011). Meanwhile, decision of the investment cannot be alone made over the using ARR.</p>
  <h3>(4) Net Present value (NPV)&nbsp;</h3>
  <div dir="ltr" align="left">
  <table><colgroup><col width="83"><col width="90"><col width="90"><col width="90"><col width="90"><col width="90"><col width="90"></colgroup>
  <tbody>
  <tr>
  <td>
  <p>Year</p>
  </td>
  <td>
  <p>2021</p>
  </td>
  <td>
  <p>2022</p>
  </td>
  <td>
  <p>2023</p>
  </td>
  <td>
  <p>2024</p>
  </td>
  <td>
  <p>2025</p>
  </td>
  <td>
  <p>2026</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>Required Investment</p>
  </td>
  <td>
  <p>-&pound;13,000,000</p>
  </td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  </tr>
  <tr>
  <td>
  <p>Working Capital Need</p>
  </td>
  <td>
  <p>-&pound;2,000,000</p>
  </td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  </tr>
  <tr>
  <td>
  <p>Contribution in Sales</p>
  </td>
  <td>
  <p>&pound;2,865,000.00</p>
  </td>
  <td>
  <p>&pound;3,008,250.00</p>
  </td>
  <td>
  <p>&pound;3,158,662.50</p>
  </td>
  <td>
  <p>&pound;3,316,595.63</p>
  </td>
  <td>
  <p>&pound;3,482,425.41</p>
  </td>
  <td>&nbsp;</td>
  </tr>
  <tr>
  <td>
  <p>Savings</p>
  </td>
  <td>
  <p>&pound; 1,680,000.00</p>
  </td>
  <td>
  <p>&pound;1,680,000.00</p>
  </td>
  <td>
  <p>&pound;1,680,000.00</p>
  </td>
  <td>
  <p>&pound;1,680,000.00</p>
  </td>
  <td>
  <p>&pound;1,680,000.00</p>
  </td>
  <td>&nbsp;</td>
  </tr>
  <tr>
  <td>
  <p>Total Contribution and Savings</p>
  </td>
  <td>
  <p>&pound;4,545,000.00</p>
  </td>
  <td>
  <p>&pound;4,688,250.00</p>
  </td>
  <td>
  <p>&pound;4,838,662.50</p>
  </td>
  <td>
  <p>&pound;4,996,595.63</p>
  </td>
  <td>
  <p>&pound;5,162,425.41</p>
  </td>
  <td>&nbsp;</td>
  </tr>
  <tr>
  <td>
  <p>Less: Depreciation</p>
  </td>
  <td>
  <p>&pound;2,400,000.00</p>
  </td>
  <td>
  <p>&pound;2,400,000.00</p>
  </td>
  <td>
  <p>&pound;2,400,000.00</p>
  </td>
  <td>
  <p>&pound;2,400,000.00</p>
  </td>
  <td>
  <p>&pound;2,400,000.00</p>
  </td>
  <td>&nbsp;</td>
  </tr>
  <tr>
  <td>
  <p>Value Before Tax</p>
  </td>
  <td>
  <p>&pound;2,145,000.00</p>
  </td>
  <td>
  <p>&pound;2,288,250.00</p>
  </td>
  <td>
  <p>&pound;2,438,662.50</p>
  </td>
  <td>
  <p>&pound;2,596,595.63</p>
  </td>
  <td>
  <p>&pound;2,762,425.41</p>
  </td>
  <td>&nbsp;</td>
  </tr>
  <tr>
  <td>
  <p>Taxes (20%)</p>
  </td>
  <td>
  <p>&pound;429,000.00</p>
  </td>
  <td>
  <p>&pound;457,650.00</p>
  </td>
  <td>
  <p>&pound; 487,732.50</p>
  </td>
  <td>
  <p>&pound;519,319.13</p>
  </td>
  <td>
  <p>&pound;552,485.08</p>
  </td>
  <td>&nbsp;</td>
  </tr>
  <tr>
  <td>
  <p>Value after Tax</p>
  </td>
  <td>
  <p>&pound;1,716,000.00</p>
  </td>
  <td>
  <p>&pound;1,830,600.00</p>
  </td>
  <td>
  <p>&pound;1,950,930.00</p>
  </td>
  <td>
  <p>&pound;2,077,276.50</p>
  </td>
  <td>
  <p>&pound;2,209,940.33</p>
  </td>
  <td>&nbsp;</td>
  </tr>
  <tr>
  <td>
  <p>Add back: Depreciation</p>
  </td>
  <td>
  <p>&pound;2,400,000.00</p>
  </td>
  <td>
  <p>&pound;2,400,000.00</p>
  </td>
  <td>
  <p>&pound;2,400,000.00</p>
  </td>
  <td>
  <p>&pound;2,400,000.00</p>
  </td>
  <td>
  <p>&pound;2,400,000.00</p>
  </td>
  <td>&nbsp;</td>
  </tr>
  <tr>
  <td>
  <p>Incremental Cash Flow</p>
  </td>
  <td>
  <p>&pound;4,116,000.00</p>
  </td>
  <td>
  <p>&pound;4,230,600.00</p>
  </td>
  <td>
  <p>&pound;4,350,930.00</p>
  </td>
  <td>
  <p>&pound;4,477,276.50</p>
  </td>
  <td>
  <p>&pound;6,609,940.33</p>
  </td>
  <td>&nbsp;</td>
  </tr>
  <tr>
  <td>
  <p>Discounted Cash flow</p>
  </td>
  <td>
  <p>-&pound;15,000,000</p>
  </td>
  <td>
  <p>&pound;3,705,939.93</p>
  </td>
  <td>
  <p>&pound;3,429,635.64</p>
  </td>
  <td>
  <p>&pound;3,175,785.22</p>
  </td>
  <td>
  <p>&pound;2,942,428.73</p>
  </td>
  <td>
  <p>&pound;3,911,223.05</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>NPV</p>
  </td>
  <td>
  <p>&pound;2,165,012.57</p>
  </td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  </tr>
  <tr>
  <td>
  <p>IRR</p>
  </td>
  <td>
  <p>16.265%</p>
  </td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  </tr>
  </tbody>
  </table>
  </div>
  <p>The incremental cash flows were calculated through multiple steps, where in first step the yearly contribution of sales was determined by adding a growth of 5% and total savings were also added which provided total new contribution and savings due to the investment. Meanwhile, the net present value (NPV) of the investment is calculated by discounting each year&rsquo;s incremental cash flow and sum of all cash flows including negative initial investment. The NPV of the investment is calculated to be &pound;2,165,012.057 which shows that since NPV is positive, hence it can be analysed that project produces profitability for the company. Because, a positive NPV is signal that investment will generate a positive value for the company and its shareholders (Baker and English, 2011). Hence, it is valuable, favourable and preferable in terms of investment. Thus, based on the calculations of NPV, it can be suggested that investment should be made by the company since it would generate a positive value.</p>
  <h3>(5) Internal rate of return (IRR)</h3>
  <p>The internal rate of return (IRR) of the investment is also calculated through excel function and calculated IRR is 16.265% which suggests that project has positive IRR, hence it will generate value. Meanwhile, another rule of thumb is that if the IRR is greater than expected rate of return then project should be accepted (Bierman and Smidt, 2012). Meanwhile, in this investment the expected rate of return or WACC is less than IRR which makes the investment project more attractive, favourable and profitable. Hence, based on this rule of the thumb the investment project should be accepted.</p>
  <h2>Potential Impact of Foreign Exchange</h2>
  <p>The company is operating in the United Kingdom but it&rsquo;s all sales is made into the three different countries; South Korea, Spain and Canada. Since, this makes company&rsquo;s sales value sensitive to the exchange rates of these countries, hence, if the exchange rate of any of these countries strengthen against the sterling pound then company&rsquo;s profitability will be affected negatively since it will receive less amount of same products due to weaker sterling pound against these currencies. Similarly, if the pound strengthens against these countries&rsquo; currencies then products of the company will become expensive for the customers which tend to affect overall sales volume of the company. Thus, in this condition the sales amount would be affected. Therefore, the impact of foreign exchange on the investment project tend to be negative in every aspect but under the condition weaker sterling pound, the sales volume may increase and benefit company at some extent but also not necessarily.</p>
  <h2>Alternate Sources of Finance</h2>
  <p>There are three different types of source of the finance a company can typically use. The first source of finance is the internal financing through retained earnings. The second source of financing is the external finances that could be used by the firm, and in this source of financing company has to issue new shares into the market in order to invest in the new project. Meanwhile, the last source of the financing is the debt, where the company can apply for the long-term loan with a bank or financial institution. However, considering the current capital structure of the company, the equity consists of 70.6% and debt consists of 29.4%; and company still has potential to get external debt from the bank or financial institution (Niu, 2008). As it has also been suggested by traditional theory of capital structure that there is an optimal mix of the capital structure through which a firm could reduce the WACC and increase the overall value as result of tax bracket on the debt. Therefore, it is suggested to the firm that should finance the investment project through debt financing because it is a cheaper way of financing and can also benefit company due to tax bracket.</p>
  <h2>Non-Financial Matters</h2>
  <p>The non-financial matter that could affect investment can include; capability of the management, required skills and professional employees to support the investment project and include the organisational culture. These aspects should be considered when investing since these could affect the investment as whole or at some extent. For instances, if the management does not have sufficient capacity to deal with the expansion then it could lead to burnout, inefficiency and ineffectiveness (Lopes and Flavell, 1998). Similarly, it is also essential that company must have professional and experts to assist in expansion of the production capacity otherwise it could turn into a disaster. Meanwhile, due to the expansion of production capacity, it is more likely that company might introduce some new technology or new processes, which must be accepted by the employees (Bakhshani, 2017). Thus, overall an organisational culture is important in accepting the change. Therefore, these are the non-financial matters that must be considered while making an investment so that benefits could be achieved as expected.</p>
  <h2>Recommendation and Conclusions</h2>
  <p>The techniques applied reveals that initial investment will be recovered in 4.8 years approximately and accounting rate of return (ARR) is 31.7% indicating that investment will provide an average return of 31.7% annually throughout project life. Meanwhile, the NPV of the project is &pound;2,165,012.057, since it is positive, thus, it can be determined that project is profitable and would create value for the company. In addition to, the internal rate of return is found to be 16.26% and since IRR is greater than WACC, hence as per the rule of thumb the project should be accepted. Because, it will create value for the company. Therefore, it is recommended for the company that investment should be made since it would create value for the company.</p>
  <h3>References</h3>
  <ul>
  <li>
  Baker, H.K. and English, P. eds., 2011. Capital budgeting valuation: financial analysis for today's investment projects (Vol. 13). John Wiley &amp; Sons.
  </li>
  <li>
  Bakhshani, S., 2017. The Relationship between Non-financial Factors, Capital Structure and the Performance of the Listed Companies on the Stock Exchange. International Journal of Economics and Financial Issues, 7(3), p.542.
  </li>
  <li>
  Bierman, J.R. and Smidt, S., 2012. The capital budgeting decision: economic analysis of investment projects. Routledge.
  </li>
  <li>
  Kuznetsov, N.E., 2016. SPECIFICS OF CALCULATIONS OF CAPITAL INVESTMENTS PAYBACK. In Совершенствование учетно-информационного обеспечения управленческих решений хозяйствующих субъектов на основе парадигмы устойчивого развития (pp. 147-150).
  </li>
  <li>
  Lopes, M.D.S. and Flavell, R., 1998. Project appraisal&mdash;a framework to assess non-financial aspects of projects during the project life cycle. International journal of project management, 16(4), pp.223-233.
  </li>
  <li>
  Magni, C.A., 2019. Accounting Measures and Economic Measures: An Integrated Theory of Capital Budgeting. Journal of Accounting and Finance, 19(9), pp.166-208.
  </li>
  <li>
  Niu, X., 2008. Theoretical and practical review of capital structure and its determinants. International Journal of Business and Management, 3(3), pp.133-139.
  </li>
  <li>
  Oktaviani, R.F., 2018. Capital Budgeting For the Feasibility of SMEs Food And Beverage. International Journal of Pure and Applied Mathematics, 119(15), pp.377-388.
  </li>
  </ul>
  <p><strong id="docs-internal-guid-aed8e127-7fff-97cb-2974-a15e8a6fdc40"><br><br></strong></p>


slug: portfolio-management
title: Portfolio Management
academic_level: Graduate
subject: Finance
type_of_paper: Assignment
citation_style: APA
meta_title: Portfolio Management
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created_at: 2025-06-24 14:01:50
updated_at: 2026-01-14 15:45:09
status: published
content:
  <p>[Name of Student]</p>
  <p>[Name of Professor]</p>
  <p>[Date of Submission]</p>
  <h2>Introduction</h2>
  <p>In the following report, a portfolio consisting of nine stocks from different industries have been selected. These all stocks are selected from the S&amp;P 500 index and belong to diversified industries which makes them favorable to construct portfolios given that diversification is one of the important characteristics of the portfolio. If a portfolio is not effectively constructing a composite of diversified assets, then an optimum portfolio cannot be constructed. This report presents a critical discussion on the characteristics of the stocks returns, volatility clustering, normality of returns, mean variance optimization and also calculation of alpha and beta values. In the end, a discussion is conducted to provide major findings for the investors.</p>
  <h2>Descriptive Statistics</h2>
  <p>The descriptive statistics of the stocks reveals the mean return showing an average return on stock has generated for the investors over the selected sample period and standard deviation indicating the value of deviation by which the average return may increase or decrease. Furthermore, minimum and maximum returns are also provided for each asset over the sample period, whereas the kurtosis and skewness values are also provided. The core purpose of the kurtosis and skewness is to show the tail and symmetry of the data based on which an idea about the distribution of data is made.</p>
  <p>Table 1 Descriptive Statistics of the Stocks</p>
  <div dir="ltr" align="left">
  <table><colgroup><col width="121"><col width="64"><col width="72"><col width="78"><col width="72"><col width="80"><col width="86"></colgroup>
  <tbody>
  <tr>
  <td>
  <p>Assets</p>
  </td>
  <td>
  <p>Mean</p>
  </td>
  <td>
  <p>SD</p>
  </td>
  <td>
  <p>Min</p>
  </td>
  <td>
  <p>Max</p>
  </td>
  <td>
  <p>Kurtosis</p>
  </td>
  <td>
  <p>Skewness</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>S&amp;P500(RI)</p>
  </td>
  <td>
  <p>0.673%</p>
  </td>
  <td>
  <p>5.121%</p>
  </td>
  <td>
  <p>-18.739%</p>
  </td>
  <td>
  <p>14.926%</p>
  </td>
  <td>
  <p>279.355%</p>
  </td>
  <td>
  <p>-99.813%</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>SPSIAED(RI)</p>
  </td>
  <td>
  <p>1.028%</p>
  </td>
  <td>
  <p>6.026%</p>
  </td>
  <td>
  <p>-24.553%</p>
  </td>
  <td>
  <p>14.837%</p>
  </td>
  <td>
  <p>303.372%</p>
  </td>
  <td>
  <p>-115.337%</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>SPSICAR(RI)</p>
  </td>
  <td>
  <p>0.137%</p>
  </td>
  <td>
  <p>11.764%</p>
  </td>
  <td>
  <p>-58.482%</p>
  </td>
  <td>
  <p>57.771%</p>
  </td>
  <td>
  <p>857.635%</p>
  </td>
  <td>
  <p>17.261%</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>SPSIBNK(RI)</p>
  </td>
  <td>
  <p>0.295%</p>
  </td>
  <td>
  <p>9.185%</p>
  </td>
  <td>
  <p>-44.748%</p>
  </td>
  <td>
  <p>20.417%</p>
  </td>
  <td>
  <p>555.696%</p>
  </td>
  <td>
  <p>-156.479%</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>SPSIEUT(RI)</p>
  </td>
  <td>
  <p>0.609%</p>
  </td>
  <td>
  <p>4.260%</p>
  </td>
  <td>
  <p>-16.551%</p>
  </td>
  <td>
  <p>9.725%</p>
  </td>
  <td>
  <p>189.341%</p>
  </td>
  <td>
  <p>-100.184%</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>SPSGFBT(RI)</p>
  </td>
  <td>
  <p>0.983%</p>
  </td>
  <td>
  <p>3.873%</p>
  </td>
  <td>
  <p>-14.285%</p>
  </td>
  <td>
  <p>9.810%</p>
  </td>
  <td>
  <p>164.807%</p>
  </td>
  <td>
  <p>-82.319%</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>SPSSHSP(RI)</p>
  </td>
  <td>
  <p>1.105%</p>
  </td>
  <td>
  <p>5.833%</p>
  </td>
  <td>
  <p>-21.765%</p>
  </td>
  <td>
  <p>15.550%</p>
  </td>
  <td>
  <p>349.594%</p>
  </td>
  <td>
  <p>-116.624%</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>SPSSLHI(RI)</p>
  </td>
  <td>
  <p>0.482%</p>
  </td>
  <td>
  <p>11.137%</p>
  </td>
  <td>
  <p>-54.012%</p>
  </td>
  <td>
  <p>32.765%</p>
  </td>
  <td>
  <p>620.630%</p>
  </td>
  <td>
  <p>-122.656%</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>SPSGMED(RI)</p>
  </td>
  <td>
  <p>0.759%</p>
  </td>
  <td>
  <p>6.528%</p>
  </td>
  <td>
  <p>-20.603%</p>
  </td>
  <td>
  <p>17.357%</p>
  </td>
  <td>
  <p>180.026%</p>
  </td>
  <td>
  <p>-74.134%</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>SPSITOB(RI)</p>
  </td>
  <td>
  <p>1.221%</p>
  </td>
  <td>
  <p>5.063%</p>
  </td>
  <td>
  <p>-12.786%</p>
  </td>
  <td>
  <p>12.291%</p>
  </td>
  <td>
  <p>5.665%</p>
  </td>
  <td>
  <p>-42.434%</p>
  </td>
  </tr>
  </tbody>
  </table>
  </div>
  <p>There are two important aspects that can be considered; one that stock returns are averages and average does not guarantee the future performance and standard deviation reflects a possible fluctuation into the return in future based on the past performance. Furthermore, referring to the mean returns of the all assets, it can be determined that ITOB has highest mean return of 1.221% with standard deviation of 5.063% suggesting that mean return of the company may increase or decrease by the value of standard deviation. Meanwhile, the lowest mean return belonged to ICAR with mean return of 0.137% with standard deviation of 11.76% indicating mean return could vary by the value of standard deviation. Based on the return and standard deviation of this asset, it can be determined that this stock carries a significant factor for the investment because the return of the stock is very low but its standard deviation is very highly showing that it carries a significant for the investor.&nbsp;</p>
  <p>The lowest or most appropriate risk-return association can be seen in the GFBT which has a return of 0.983% with standard deviation of 3.87%, and this association and composition of return and return is better than all other stocks risk-return composition based on the fact that each of the stock&rsquo;s higher risk is higher or return is lower or if it has lower risk then return is higher which is an unusual. Therefore, it can be determined that there are various complications that needs to be considered in the construction of portfolio and based on the theory of risk and return, the GDBT better reflects the theory that a higher risk will yield a higher return and lower risk will yield a lower return. Hence, higher return cannot be achieved without higher risk.</p>
  <h2>Stock&rsquo;s Returns</h2>
  <h3>Volatility Clustering</h3>
  <p>Volatility clustering refers to the condition of financial markets which states that large changes are followed by the large changes and small changes are followed by small changes. This implies that if there are small changes into the prices of stocks then fluctuations will also be small in intensity (Tseng and Li, 2011). However, if there has been a large change into the price of the stock then fluctuations also tend to be large. Hence, it has been defined to term that nature of the change determines change to be followed by (Tseng and Li, 2012). Meanwhile, order to determine presence of volatility clustering into the selected assets, line chart has been constructed for all stocks together as follows</p>
  <p><img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXf05uuzSWtHcp3vqATBTvn8nnUdXKRvm1lqEbtthv91DIqTUfvPgRKlLtBBpPtKIuucUFMcRZzgN5RVUTR8gH8s_7Xm84qfyPow57YH4CnZJgHP42FXziXzE1o_OlB4NS2Ev7Z_?key=5U4H2-e9tHSxOAn6uQWaPw" alt="Volatility Clustering" width="624" height="310"></p>
  <p>Figure 1 Volatility Clustering</p>
  <p>Referring to the figure 1, it shows the volatility clustering is present into the stocks&rsquo; return as it can be observed during the financial crises 2008 to 2009, where a small change into the price is followed by smaller but as the intensity of the price reduction increases then another higher wave is followed. Meanwhile, when market starts to normalizes then it can be observed then intensity of the fluctuations declines. Hence, there is sufficient evidence of presence of volatility clustering.</p>
  <h2>Normality of Returns</h2>
  <p>The normality refers to the distribution of the data which if comes from the normal distribution then assumption of normality is met and is stated that data has no issues. However, if the normality is absent from the data then treating the data only remains an option to followed (Karoglou, 2010). Meanwhile, in following report the normality of the stock&rsquo;s return is determined by the histograms of all stocks. See appendix for the histograms of stocks return. The histogram of all stocks have approximately bell-curve shape indicating that data of the stock returns comes from the normal distribution. However, another important factor that can be highlighted here and the reason why stock&rsquo;s return is normally distributed. The core reason is that return of the stock is not normally calculated as current minus previous divided by previous. But in contrast the firstly the stock prices were transformed into the natural log or also known as natural logarithm and then returns were calculated based on the natural log (Ling, 2017). Thus, the returns of the stocks come from the normal distribution.</p>
  <h2>Mean Variance Optimization</h2>
  <p>The mean variance optimization refers to the process of achieving a portfolio with minimum variance or at least offers a best compensated return at given level of risk. In modern theory, the return is associated with the risk, which can be translated as that if the stock has higher return then it would also have a higher risk (Bruni et al., 2015). However, if the risk is lower then return also tend to be lower. As the efficient market hypothesis states that investor cannot beat the market which means the investor cannot be earn more than market until and unless if the investment is made into the risky assets. This means investors cannot outperform the market if they make investment into the risky assets (Baitinger and Papenbrock, 2017). Meanwhile, in order to achieve a mean variance optimization portfolio, we used the excel solver with optimization option which allows to achieve a desired return at given level of risk and also allows to achieve optimal risky portfolio at which portfolio can achieve highest possible return at lowest possible risk level. This means it would be level at which the Sharpe ratio would be maximized given that a higher Sharpe ratio means that portfolio effectively compensate each risk point in terms of returns (Omisore, Yusuf and Christopher, 2011). Meanwhile, calculations of the mean variance optimization as follows</p>
  <p>Table 2 Stock average returns and risks</p>
  <div dir="ltr" align="left">
  <table><colgroup><col width="86"><col width="62"><col width="69"><col width="134"><col width="70"><col width="70"><col width="134"></colgroup>
  <tbody>
  <tr>
  <td rowspan="2">
  <p>Stocks</p>
  </td>
  <td colspan="3">
  <p>Monthly</p>
  </td>
  <td colspan="3">
  <p>Annualized</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>Return</p>
  </td>
  <td>
  <p>Variance</p>
  </td>
  <td>
  <p>Standard Deviation</p>
  </td>
  <td>
  <p>Return</p>
  </td>
  <td>
  <p>Variance</p>
  </td>
  <td>
  <p>Standard Deviation</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>SPSIAED</p>
  </td>
  <td>
  <p>1.028%</p>
  </td>
  <td>
  <p>0.360%</p>
  </td>
  <td>
  <p>6.003%</p>
  </td>
  <td>
  <p>13.060%</p>
  </td>
  <td>
  <p>4.324%</p>
  </td>
  <td>
  <p>20.794%</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>SPSICAR</p>
  </td>
  <td>
  <p>0.137%</p>
  </td>
  <td>
  <p>1.374%</p>
  </td>
  <td>
  <p>11.720%</p>
  </td>
  <td>
  <p>1.659%</p>
  </td>
  <td>
  <p>16.483%</p>
  </td>
  <td>
  <p>40.599%</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>SPSIBNK</p>
  </td>
  <td>
  <p>0.295%</p>
  </td>
  <td>
  <p>0.837%</p>
  </td>
  <td>
  <p>9.150%</p>
  </td>
  <td>
  <p>3.596%</p>
  </td>
  <td>
  <p>10.048%</p>
  </td>
  <td>
  <p>31.698%</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>SPSIEUT</p>
  </td>
  <td>
  <p>0.609%</p>
  </td>
  <td>
  <p>0.180%</p>
  </td>
  <td>
  <p>4.244%</p>
  </td>
  <td>
  <p>7.556%</p>
  </td>
  <td>
  <p>2.161%</p>
  </td>
  <td>
  <p>14.700%</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>SPSGFBT</p>
  </td>
  <td>
  <p>0.983%</p>
  </td>
  <td>
  <p>0.149%</p>
  </td>
  <td>
  <p>3.859%</p>
  </td>
  <td>
  <p>12.454%</p>
  </td>
  <td>
  <p>1.787%</p>
  </td>
  <td>
  <p>13.366%</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>SPSSHSP</p>
  </td>
  <td>
  <p>1.105%</p>
  </td>
  <td>
  <p>0.338%</p>
  </td>
  <td>
  <p>5.811%</p>
  </td>
  <td>
  <p>14.099%</p>
  </td>
  <td>
  <p>4.052%</p>
  </td>
  <td>
  <p>20.131%</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>SPSSLHI</p>
  </td>
  <td>
  <p>0.482%</p>
  </td>
  <td>
  <p>1.231%</p>
  </td>
  <td>
  <p>11.095%</p>
  </td>
  <td>
  <p>5.946%</p>
  </td>
  <td>
  <p>14.771%</p>
  </td>
  <td>
  <p>38.434%</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>SPSGMED</p>
  </td>
  <td>
  <p>0.759%</p>
  </td>
  <td>
  <p>0.423%</p>
  </td>
  <td>
  <p>6.503%</p>
  </td>
  <td>
  <p>9.494%</p>
  </td>
  <td>
  <p>5.075%</p>
  </td>
  <td>
  <p>22.527%</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>SPSITOB</p>
  </td>
  <td>
  <p>1.221%</p>
  </td>
  <td>
  <p>0.254%</p>
  </td>
  <td>
  <p>5.044%</p>
  </td>
  <td>
  <p>15.671%</p>
  </td>
  <td>
  <p>3.053%</p>
  </td>
  <td>
  <p>17.472%</p>
  </td>
  </tr>
  </tbody>
  </table>
  </div>
  <p>The table 2 provides the risk and returns of all stocks calculated for the construction of portfolio. Furthermore, based on the calculations, the firstly the Pearson&rsquo;s correlation was calculated between all stocks and then covariance and variance matrix was computed with the help excel functions and this helped to develop the optimal portfolio as the portfolio returns cannot be computed until and unless we have correlation and variance-covariance matrix (Kim and Francis, 2013). As per the requirements, two different portfolios were constructed; (1) long-constraint portfolio and (2) short-selling allowed portfolio. The results of the portfolio as follows</p>
  <p>Table 3 Portfolios</p>
  <div dir="ltr" align="left">
  <table><colgroup><col width="132"><col width="72"><col width="72"></colgroup>
  <tbody>
  <tr>
  <td>
  <p>Portfolio</p>
  </td>
  <td>
  <p>Long</p>
  </td>
  <td>
  <p>Short</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>SPSIAED</p>
  </td>
  <td>
  <p>3.74%</p>
  </td>
  <td>
  <p>3.74%</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>SPSICAR</p>
  </td>
  <td>
  <p>0.00%</p>
  </td>
  <td>
  <p>0.00%</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>SPSIBNK</p>
  </td>
  <td>
  <p>0.00%</p>
  </td>
  <td>
  <p>0.00%</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>SPSIEUT</p>
  </td>
  <td>
  <p>0</p>
  </td>
  <td>
  <p>0</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>SPSGFBT</p>
  </td>
  <td>
  <p>28.60%</p>
  </td>
  <td>
  <p>28.60%</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>SPSSHSP</p>
  </td>
  <td>
  <p>12.49%</p>
  </td>
  <td>
  <p>12.49%</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>SPSSLHI</p>
  </td>
  <td>
  <p>0.00%</p>
  </td>
  <td>
  <p>0.00%</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>SPSGMED</p>
  </td>
  <td>
  <p>0.00%</p>
  </td>
  <td>
  <p>0.00%</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>SPSITOB</p>
  </td>
  <td>
  <p>55.17%</p>
  </td>
  <td>
  <p>55.17%</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>Total</p>
  </td>
  <td>
  <p>100.00%</p>
  </td>
  <td>
  <p>100.00%</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>Portfolio Return</p>
  </td>
  <td>
  <p>14.5%</p>
  </td>
  <td>
  <p>0.14</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>Portfolio Risk</p>
  </td>
  <td>
  <p>2.4%</p>
  </td>
  <td>
  <p>0.02</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>Portfolio Std. Dev</p>
  </td>
  <td>
  <p>15.4%</p>
  </td>
  <td>
  <p>15.4%</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>Sharpe Ratio</p>
  </td>
  <td>
  <p>0.79&nbsp;</p>
  </td>
  <td>
  <p>0.79&nbsp;</p>
  </td>
  </tr>
  </tbody>
  </table>
  </div>
  <p>Based on the table 3, it can be determined that either long or short, the weights of portfolios are same although during the calculations of solver, the in short portfolio the constraint of all weights greater than zero was removed to let excel decide which stock to make short and which not to. But the results of the both portfolios were same and this indicates that this is only optimal solution and minimum variance portfolio that can provide investor with highest possible return with lowest possible return. Furthermore, the based on the constructed portfolios, the efficient frontier was also constructed with help of excel solver where multiple portfolios were constructed based on trial and error and efficient frontier was constructed and is present as follows</p>
  <p><img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXf2Cb9nZWK4RqHuZWGfUVowwXY7I-fl6LCfPfLZNfNbpsleeB10K-bNZ2JU9U3jR2iFkcKwZgVA8GEe52seoVImdIVpXgO2bB2bHQ5WOUQT8RiCVONRxXItqneu47b-ohQGHJnE7g?key=5U4H2-e9tHSxOAn6uQWaPw" alt="Efficient Frontier Figure" width="624" height="332"></p>
  <p>Figure 2 Efficient Frontier</p>
  <p>The efficient frontier shows the minimum variance portfolio highlighted in red dot exactly at the curve where an optimal portfolio is achieved. Therefore, it can be determined if the investment is made as per the optimal portfolio then a better return can be achieved after managing the risk.</p>
  <h2>Calculation of Alpha and Beta</h2>
  <p>The alpha refers to the excess return over an investment after adjusting for the market related risks to the investment and beta refers to the systematic risk associated with the stock. Meanwhile, to analyze the stocks and portfolio the alpha and betas of all stocks were calculated as follows</p>
  <p>Table 4 Alpha and Beta</p>
  <div dir="ltr" align="left">
  <table><colgroup><col width="46"><col width="64"><col width="64"><col width="64"><col width="62"><col width="66"><col width="64"><col width="61"><col width="71"><col width="63"></colgroup>
  <tbody>
  <tr>
  <td>
  <p>Stocks</p>
  </td>
  <td>
  <p>SPSIAED</p>
  </td>
  <td>
  <p>SPSICAR</p>
  </td>
  <td>
  <p>SPSIBNK</p>
  </td>
  <td>
  <p>SPSIEUT</p>
  </td>
  <td>
  <p>SPSGFBT</p>
  </td>
  <td>
  <p>SPSSHSP</p>
  </td>
  <td>
  <p>SPSSLHI</p>
  </td>
  <td>
  <p>SPSGMED</p>
  </td>
  <td>
  <p>SPSITOB</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>Alpha</p>
  </td>
  <td>
  <p>0.003</p>
  </td>
  <td>
  <p>-0.010</p>
  </td>
  <td>
  <p>-0.006</p>
  </td>
  <td>
  <p>0.003</p>
  </td>
  <td>
  <p>0.006</p>
  </td>
  <td>
  <p>0.005</p>
  </td>
  <td>
  <p>-0.008</p>
  </td>
  <td>
  <p>0.000</p>
  </td>
  <td>
  <p>0.008</p>
  </td>
  </tr>
  <tr>
  <td>
  <p>Beta</p>
  </td>
  <td>
  <p>1.067</p>
  </td>
  <td>
  <p>1.649</p>
  </td>
  <td>
  <p>1.349</p>
  </td>
  <td>
  <p>0.450</p>
  </td>
  <td>
  <p>0.574</p>
  </td>
  <td>
  <p>0.971</p>
  </td>
  <td>
  <p>1.970</p>
  </td>
  <td>
  <p>1.166</p>
  </td>
  <td>
  <p>0.650</p>
  </td>
  </tr>
  </tbody>
  </table>
  </div>
  <p>The table 4 provides the alpha and beta of the stocks where it is evident that ITOB provides highest excessive return as it has highest alpha and riskiest stock is SLHI since it has highest beta of 1.97 which is near to 2. This implies that if market losses 1% then this stock will almost loose double than market due to higher fluctuations.</p>
  <h2>Discussion and Conclusion</h2>
  <p>Based on the findings of the portfolio optimization, it can be determined that for construction of portfolio the diversified stocks must be selected from different industries but their selection should also be systematic rather than random. Thus, stocks should be chosen based on their past performance, portfolio objectives and risk-return expectations. This would allow investor to have higher returns based on the fact risk would be managed more effectively. Thus, diversified portfolio would enable us to manage the risk easily. However, it is critical that short-selling should not be used while constructing a portfolio which may affect overall performance of the portfolio as investor may not be able to meet his expectations.</p>
  <h3>References</h3>
  <ul>
  <li>&nbsp;Baitinger, E. and Papenbrock, J., 2017. Interconnectedness risk and active portfolio management. Journal of Investment Strategies.</li>
  <li>Bruni, R., Cesarone, F., Scozzari, A. and Tardella, F., 2015. A linear risk-return model for enhanced indexation in portfolio optimization. OR spectrum, 37(3), pp.735-759.</li>
  <li>Karoglou, M., 2010. Breaking down the non-normality of stock returns. The European journal of finance, 16(1), pp.79-95.</li>
  <li>&nbsp;Kim, D. and Francis, J.C., 2013. Modern portfolio theory: Foundations, analysis, and new developments. John Wiley &amp; Sons.</li>
  <li>Ling, X., 2017. Normality of stock returns with event time clocks. Accounting &amp; Finance, 57, pp.277-298.</li>
  <li>&nbsp;Omisore, I., Yusuf, M. and Christopher, N., 2011. The modern portfolio theory as an investment decision tool. Journal of Accounting and Taxation, 4(2), pp.19-28.</li>
  <li>Tseng, J.J. and Li, S.P., 2011. Asset returns and volatility clustering in financial time series. Physica A: Statistical Mechanics and its Applications, 390(7), pp.1300-1314.</li>
  <li>Tseng, J.J. and Li, S.P., 2012. Quantifying volatility clustering in financial time series. International Review of Financial Analysis, 23, pp.11-19.</li>
  </ul>
  <h2>Appendix</h2>
  <p><img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXevxVQHzP4WqfRg_GXvNB2lkNuJlqXpU-WcKexRmAORL5EEmzEPln4Xerhs56KqHOY2-vOit7KgXJQbJztSXO2oxxBKP2AA3DL-2ArI-nRavSRa0gO-OdmX8lA5evqQFz4NwNwsCQ?key=5U4H2-e9tHSxOAn6uQWaPw" alt="SP 500" width="454" height="288"></p>
  <p><img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfdgWx9kySYQ7ARHbaiF_quBZnvQxk4dIUpOXnKiJyTHy3F1UmiJcE0cTjjJ6lNtWuG9tDkaK8Rzq0DHhIwtLn0yAdMagyw7SUeLUGoJ_5l8bqiTEN36t7Bwdy7thSB3a1pulYWoQ?key=5U4H2-e9tHSxOAn6uQWaPw" alt="Aerospace &amp; Defence" width="453" height="288"></p>
  <p><img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdpSY-NnsRkbd6hiW7qqiAXJj6UMokmz7osKtMcQHBjH1ab_-N8ngV0NYDMfRxed0pfWbo8B9niMt9vpyoIRhwjhBAvq7gMuC4HOq7iyt1KZ_4tnLvJgB7ReC6TYAQkvkFgzhXZpw?key=5U4H2-e9tHSxOAn6uQWaPw" alt="Automobiles" width="453" height="288"></p>
  <p><img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd1eGTrwx__G56E_Tk61VA4yy9-uPPQTc-NLz721lcgPJujKMzOauUkFL7g_wwlSzC5hp9JZkzBL2pt6_2uZi9Fmbfa5klHL_Y5Vr9pAK9gyiz-fJvMmk7_O1VXJl5uyRfgTkERxw?key=5U4H2-e9tHSxOAn6uQWaPw" alt="Banks" width="461" height="288"></p>
  <p><img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdOdILhVAcJl2lPMjzGVSASGMQd6FRpm6eMuz6IHyaK6YMoIYGv69WyqVs0LnlKB1Uhn4Bui4bV9Fbp4TErDkoi-_IxWSVE3zrUBK4bnkPqAuV1VPGa07ZvttsI4MJaQUb0vtzeBw?key=5U4H2-e9tHSxOAn6uQWaPw" alt="Electric Utilities" width="454" height="288"></p>
  <p><img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXecePRM6U-oa-Opojvo17OcWTjD-0HADhOkjv5Qle3u76ewgPQzWo1xOmn3nZUjllX-5yKJ0dPwgSo3SsvugWMKIKzdhKLQ572dnaf3N5q7SM-dH08fXPWuA1D_Nan8Cv5shBB4PA?key=5U4H2-e9tHSxOAn6uQWaPw" alt="Food Bev &amp; Tobacco" width="453" height="288"></p>
  <p><img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcDS6arI24xM2BT2dfLdzWiplINRAxGKKWGUxus9B_TAYBtxrzEvMTzQtFYluBHvFs0JncMaXD34GLMtEluYigDCVSJg0dak8R66wbAggXY589e4DK7K6xDMSNANDvMlMaSQNfo?key=5U4H2-e9tHSxOAn6uQWaPw" alt="Health Care Supplies" width="453" height="288"></p>
  <p><img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXev59M-rGFHS_jywjXw6O4g1SrMhYxQ5BsjwYwyX0H7mW08EnuFjsvIklNWKyL1BCiF04wZtXyVyLNE30LyIKGax_ySo2xi0H68zj1tai5lWSqz4xtaqSpnemf_KbGv5PyuXFiq?key=5U4H2-e9tHSxOAn6uQWaPw" alt="Life &amp; Health Ins" width="461" height="288"></p>
  <p><img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeQVdbkbPtsSnjz16IXeOoRC2scCcOagcJRr0Xb8Ffs2er6haHZoehLxlBRT-tRdFd_HXun5p7lVRVS43K2AF4oRAKDQa5hch4YykOa9DUipdfejkE8dgMOfQ0rABsLKarmvPL0?key=5U4H2-e9tHSxOAn6uQWaPw" alt="Media" width="454" height="288"></p>
  <p><img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe1x50qMJdXvmd3cajVYXEmvpANkcMOvooFGMrXMuTHiq0Y4TTW3qkkVd3qtZpR2GJo2Z6Pgf1xewsFpa_aOPxlU1sx9ACL_ZN97ZyU52nynz1rWK7LgFsem3RxQLuTAylCaxbjpA?key=5U4H2-e9tHSxOAn6uQWaPw" alt="Tobacco" width="453" height="288"></p>

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slug: a-study-on-pharmaceutical-sector-of-uk
title: A Study On Pharmaceutical Sector Of Uk
academic_level: Undergraduate
subject: Finance
type_of_paper: Dissertation
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meta_title: A Study On Pharmaceutical Sector Of Uk
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created_at: 2025-06-24 14:37:49
updated_at: 2026-01-14 15:44:58
status: published
content:
  <h2>To Investigate The Impact Of Working Capital On Firm&rsquo;s Profitability: A Study On Pharmaceutical Sector Of Uk&nbsp;</h2>
  <p>[Submitted by]</p>
  <p>[Submitted to]</p>
  <p>[Date of Submission]</p>
  <p>[Name of University]</p>
  <p><strong>Abstract</strong></p>
  <p>Contemporarily, companies in the business world have focused towards the ways to increase their profitability while minimising the possibilities of risks that could affect companies' financial health and performance. In this regards, working capital and liquidity position is defined as critical for an organisation in order to meet the short-term or long-term obligations. Hence, this research was aimed at the determination of the effect of working capital on the profitability of pharmaceutical companies in the UK. For this purpose, secondary quantitative research was conducted on 10 years data of 5 pharmaceutical publicly listed companies in the UK. The variables of the study consisted of ROA, ROE, and net profit margin as dependent variables; whereas independent variable consisted of inventory turnover, debt to equity, current ratio, and accounts payable in days. Meanwhile, three regression tests were conducted with each dependent variable, and the result of the first test suggests that only current ratio and accounts payable in days have a statistically significant and positive impact on the ROA. On the other hand, the second test result suggests that there is a statistically insignificant impact of working capital on profitability. However, the third test of net profit margin indicates that inventory turnover, current ratio and accounts payable in days has a statistically significant and positive impact on the return on equity. Meanwhile, the paper also discusses the applications and implications of the research; in order to assist Pharmaceutical companies and future researcher.</p>
  <p><strong>List of Figures</strong></p>
  <p><a href="https://docs.google.com/document/d/1ilJ2EQLK8J2pHrjrc17dnPtXzFDz-eGo/edit#heading=h.7j31o9679r5l">Figure 1 Descriptive Statistics Result 27</a></p>
  <p><a href="https://docs.google.com/document/d/1ilJ2EQLK8J2pHrjrc17dnPtXzFDz-eGo/edit#heading=h.hjjad5mmybly">Figure 2 Correlation Results 29</a></p>
  <p><a href="https://docs.google.com/document/d/1ilJ2EQLK8J2pHrjrc17dnPtXzFDz-eGo/edit#heading=h.1upse8uk2l41">Figure 3 Regression Model 1 33</a></p>
  <p><a href="https://docs.google.com/document/d/1ilJ2EQLK8J2pHrjrc17dnPtXzFDz-eGo/edit#heading=h.29bnq3h9wsr6">Figure 4 Regression Model 2 34</a></p>
  <p><a href="https://docs.google.com/document/d/1ilJ2EQLK8J2pHrjrc17dnPtXzFDz-eGo/edit#heading=h.se1jn44e0e22">Figure 5 Regression Model 3 35</a></p>
  <h3>Chapter 1: Introduction</h3>
  <h4>1.1 Contextual Background</h4>
  <p>This research serves the purpose of determining how working capital management impacts the profitability of a firm. Working capital of a firm can be in form of a stock having a resale value so that the firm can generate profit out of it. Usually, working capital comprises of around 30% to 40% of the total investment of the firm. Profit generated from working capital investment determines how the firm is operating and whether its investment is effective or not. Managing working capital efficiently is significantly important for a business; it involves plan and control of current liabilities and current assets so that a balance can be maintained between profitability and liquidity (Enqvist, Graham and Nikkinen, 2014).&nbsp;</p>
  <p>Working capital could be regarded as highly critical for companies that wish to operate in a complex working environment. The rising complexities have made it difficult for businesses to operate and attain operational efficiency. In this regard, it becomes imperative for firms to assess every factor and its impact on the profitability of the company. While working capital has been established as a critical component in the performance of firms, less has been studied regarding the impact and effect of it in the pharmaceutical sector. As it has been understood that the implications of various factors may differ in varied industries and businesses, it is important to specifically focus on a particular industry to rightly deduce an assessment. One of the major objectives of firms in the private sector could be regarded as profit maximization. With this being said, businesses are keen to understand the factors that may have an effect on it (directly or indirectly). While several external influences have an impact on the firm and its success, working capital could be identified as an internal element of the company that proves to be significant.</p>
  <p>Considering working capital to be an important aspect for organisations, the management of the same could also be regarded as imperative for firms. In simple terms, the difference between current liabilities and current assets of the company could be regarded as working capital. Adequate management of working capital could be regarded as critical for the financial health of the organisation along with operational success. Businesses should attempt to utilize WCM to maintain a good balance between liquidity, growth and profitability. If a business does not have enough working capital to cater to its obligations, the financial insolvency may lead to serious concerns (bankruptcy or liquidation of assets). In order to ensure effective WCM, firms must majorly focus on managing inventories, accounts payable, cash and accounts receivable. While the need for working capital may vary in different industries, it is critical for every organisation to assess the need for it.</p>
  <p>This study is subject to assessing working capital management skills of pharmaceutical companies to generate profit. This study focuses on the pharmaceutical industry of the UK because the management of the working capital in large pharmaceutical industries has been quite difficult. Moreover, as stated by Vishnani and Shah (2007) pharmaceutical industry is more sustainable, cost-effective and less risky business model which requires effective working capital management in order to provide potential benefits and high returns on cash to the investors. An entity that wants to generate higher profit must keep a balance between short term liabilities and short-term assets. The purpose of this study is to explore the effect of working capital on earnings in UK pharmaceutical companies. This research proposal indicates how this research will be carried out to reach results as to what is the influence of working capital on profit of business entities but it is restricted to the pharmaceutical sector in the UK.</p>
  <h4>1.2 Problem Statement</h4>
  <p>Studies have been carried out in the context of firms&rsquo; profitability due to the working capital management of the organisation (Martinez-Solano, 2007; Mathuva, 2015). However, it has been observed that the liquidity of the firm is reduced with the increasing profitability of the firm and increasing focus towards liquidity will influence the profitability (Enqvist, Graham and Nikkinen, 2014). Therefore, the major focus of the companies revolves around the topic of maximising the firms&rsquo; profitability by limiting the liquidity of the firm. On the other hand, this would result in a number of problems which might lead to the financial insolvency within companies (&Ouml;NER, 2016). Therefore, this study is carried out by focusing on effective working capital while maintaining equilibrium between these two variables. The major focus of the study is to analyse the best methods of working capital that can be utilised within pharmaceutical firms in order to increase the profitability, bearing in mind the influences of increased or decreased liquidity of the firm.</p>
  <p>One of the major reasons why the focus of investigations has been put on the pharmaceutical sector is the fact that there has been very less research carried out in this field with regards to the impact of working capital on the profitability of the firm (Mathuva, 2015). Considering the impact and contribution of working capital has been assessed in various fields, and it has been assessed that working capital plays an imperative role in the performance of the organisation. Having said this, not a lot has been done to assess the impact on pharmaceutical sectors and how companies in this industry would be affected by it. Through this study, the research gap would be filled as the specific focus has been put towards the organisations operating in this field. The performance of varied firms in the pharmaceutical sector would be analysed through reviewing their annual reports, in order to assess how the aspect has been affecting the businesses and what must be done in order to avoid the adversities.&nbsp;</p>
  <h4>1.3 Aim and Objectives</h4>
  <p>The research aims at the determination of effect of working capital on profit of pharmaceutical companies in UK. This aim is to be achieved through the following objectives;</p>
  <ul>
  <li>To understand the concept of working capital&nbsp;</li>
  <li>To determine how working capital can be managed efficiently by a company</li>
  <li>To identify the components of working capital</li>
  <li>To determine the effect of working capital on profit in general</li>
  <li>To assess the influence of working capital on earnings of pharmaceutical companies in the UK.</li>
  </ul>
  <h4>1.4 Research Questions</h4>
  <p>The research will address the following questions;</p>
  <ul>
  <li>What is the idea of working capital?</li>
  <li>How working capital can be managed efficiently?</li>
  <li>What are the components of working capital?</li>
  <li>What is the effect of working capital on the profit of companies in general?</li>
  <li>What is the effect of working capital on earnings of pharmaceutical entities in the UK?</li>
  </ul>
  <h4>1.5 Significance and Rationale of the study</h4>
  <p>The basic variables of the study are working capital and profitability and both these variables hold great importance for business entities (Raheman et al., 2010). These entities must be aware of managing working capital efficiently and generate profit. There are many studies in the literature on the topic but this research will be specific to the pharmaceutical sector of the UK. Different studies were conducted in relation to different sector and regions but there are very few studies on the pharmaceutical sector of the UK to assess the influence of working capital on profit. Therefore, this research is significantly important for the pharmaceutical sector of UK so that companies which are not aware of the importance of working capital get to understand its impact. Also, the study would lead to being significant for academicians who wish to study and research regarding the impact of working capital on the profitability of firms as different dynamics related to working capital would be discussed in it.</p>
  <p>The study would not only add to the related dynamics of working capital, but would also provide critique regarding the impact of it on the profitability of firms in the pharmaceutical sector. While it has been understood that working capital is an important aspect for businesses and their performance, this study specifically focuses on the pharmaceutical sector and how the impact may vary in this regard. Working capital is mainly considered imperative for maintaining the financial health of the organisation, but the impact it has particularly on the profitability has been rarely discussed. With this study, the variable of profitability would keenly be assessed in terms of working capital in order to critically evaluate how businesses may be affected through the volatility of it. In order to assess the impact on it on business profitability, the pharmaceutical sector of UK has been taken into consideration, in order to deduce how pharmaceutical companies operating in the specific area would be affected by it.&nbsp;</p>
  <h4>1.6 Research Structure</h4>
  <p>This reporting structure is divided into four main sections. In the first section, the researcher has identified the aims and objectives, research questions and problem statement of the research. In the second section, the researcher has reviewed various secondary researches to conduct the literature review by dividing the research topic into different parts. Then, the methodology in which the researcher has mentioned key methods and techniques that will be utilised in the research. In the final section, major ethical considerations that will be maintained by the researcher in the report are mentioned.</p>
  <h3>Chapter 2 Literature Review</h3>
  <h4>2.1 Working Capital</h4>
  <p>Companies in this contemporary business world have focused on the ways of increasing their profitability while minimising the possible risks that could affect companies' financial health. Therefore, working capital is required and necessary for an organisation in order to meet the short-term or long-term obligation. According to Teruel and Solano (2007), it has been observed that working capital has the propensity to measure the efficiency and short-term financial health of the business. Working capital, in words of Mathuva (2015) is a way of measuring the tendency to pay business liabilities with the help of the current assets within the organisation. However, if a firm does not maintain effective working capital, it results in the lack of future growth of the business, similarly affecting the financial health of the organisation. The study of Makori and Jagongo (2013) defined working capital as a difference of current assets and current liabilities and it is necessary to maintain a balance between outgoing and incoming payments. Effective working capital indicates that the company is able to pay its short-term liabilities within a period of one year. This makes the financial analysts become sensitive for the calculation of working capital.&nbsp;</p>
  <p>The working capital ratio, as per the words of Enqvist, Graham and Nikkinen (2014) show the liquidity position of a firm; however poor working capital results in the decline in the ability of a firm to pay off their liabilities in a given period of time. According to Raheman et al. (2010), the working capital is important for any company, especially the distribution or manufacturing firms that have a direct impact on the profitability or liquidity of the firms. This is because in manufacturing and distributing firms, working capital accounts for more than half if its total assets and operations. However, it has also been explored that ineffective working capital or working capital management leads to the bankruptcy of the firms even if the company has positive and increasing profitability. Considering a number of varied policies that companies implement over time, enhancing working capital management has resulted in being one of the most important aspects for businesses. While the importance of working capital may vary from business to business, firms must assess the need for it according to nature and type of the organization.</p>
  <p>Working capital has been understood as an imperative aspect for businesses in terms of maintaining financial health. The rising work complexities have made it critical for businesses to focus on all such aspects that may have an impact on the performance of the organization (Makori and Jagongo, 2013). In this regard, assessing the impact of working capital could be considered as a critical aspect for firms in the pharmaceutical sector. As stated by Napompech (2012) working capital management on the other hand is essential in order to plan and organize the finances so the firm may be able to ensure smooth operations. In order to maintain a balance between growth, liquidity and profitability, firms must develop effective working capital management strategies. Sustaining a positive cash flow for instance is critical for companies that have to make frequent transactions, and this could only be attained if proper WCM takes place within companies.</p>
  <h4>2.2 Importance of Working Capital</h4>
  <p>Several studies have been conducted in the subject of working capital or working capital management that asserts the significance and importance of the term in financial management (Sagner, 2010; Agyei-Mensah, 2010; Enqvist, Graham and Nikkinen, 2014). According to Nazir and Afza (2009), the term, working capital help the financial analysts to meet the financial requirements of an organization that are due within short-term and is not retained within the organization for a longer period of time. However, the amount of money which is invested in working capital may change its form. The study of Agyei-Mensah (2010) revealed that the maintenance of working capital might be a difficult task for an organisation. The importance of working capital is viewed as the flow of blood within the human body, as the working of funds and capitals is used to maintain the business (Enqvist, Graham and Nikkinen, 2014). Therefore, if the working capital of an organisation becomes weak, the survival of a business in the business environment is in serious threat.</p>
  <p>The study of Hanushek (2013) explored that the working capital starvation can be the major cause of the business failure in various countries, however business can only be succeeded it is able to generate cash. Moreover, poor business performance can also be results of poor financial management in terms of working capital and planning of the cash requirements. However, most of the studies have related to business performance failure to the lack of managerial hold and competencies (Raheman et al., 2010; Mansoori and Muhammad, 2012; Sagner, 2010). On the other hand, the survival and growth of the company can be interpreted with respect to working capital management. For every size of the company, the management of working capital has been beneficial for its growth and survival which dictates the importance of working capital in terms of organisational context (Makori and Jagongo, 2013). The wealth of any business can be seen in terms of its assets, while most of the multinational organisations do not want to hold on to most of the assets on their financial books (Mansoori and Muhammad, 2012). The non-ideal conditions within production and manufacturing firms produce current assets which become the major reason for a business to invest in total assets (Abbasaali and Milda, 2012; Makori and Jagongo, 2013). Therefore, it can be said that working capital is of great importance which defines the cash flows and increases the business value.</p>
  <h4>2.3 Types of Working Capital</h4>
  <p>According to Alavinasab and Davoudi (2013), the working capital is divided into two main categories; balance sheet and operating cycle view. The balance sheet view is further divided into net working capital and gross working capital while the operating view is divided into permanent or temporary working capital. Mathuva (2015) asserted that the working capital is the movement of funds or capital that are needed for daily operations of the business while the definition of working capital in terms of balance sheet view is described as the amount of money that is invested or received for receivables, cash or receivables. This definition is normally related to the current assets that are included in the balance sheet of an organisation. Moreover, the balance sheet view also shows the part of the working capital in terms of payables or current liabilities of the firm that are supposed to be paid within a period of one year, is the net working capital (Abbasaali and Milda, 2012). According to Larson and Gray (2013), the net working capital; working capital is supposed to indicate the amount of money which is needed to be invested for long-term capital of a business as its working capital. However, the net working capital can be negative sometimes in situations when the company has more liabilities as compared to its assets.</p>
  <p>In terms of operating working capital, it is the receivables minus payables plus inventories. The permanent working capital is defined as a limited and particular amount of money that is required to perform business activities at all levels. Guimaraes and Nossa (2010) explained permanent working capital as the current assets that are required to perform business activities continuously for a period of one year. However, the working capital has a particular period for its existence, i.e. one year, while a particular amount of investment is always constant or permanent (Enqvist, Graham and Nikkinen, 2014). In the case of production, a certain amount of investment always remains constant even after the end of the accounting period such as finished stocks or raw materials. However, the calculation of such working capital is carried forward to the next year (Sagner, 2010). Therefore, as a concluding statement, it can be said that the permanent working capital is the minimum amount of capital in current assets which are considered important for the continuous operations of the company. In terms of temporary working capital, the investments made by the business in order to cater to the fluctuations in any business operations or activities are crucial for the company's sustainability as well. According to Tufail and Khan (2013), the temporary working capital is considered important in the context of seasonal variations that occur during the company operations. Companies are not required to maintain the accounts for this working capital in a year, however temporary working capital is considered significant for the case of short-term capitalisation (Makori and Jagongo, 2013).</p>
  <h4>2.4 Components of Working Capital</h4>
  <p>As working capital has been regarded as an imperative aspect for companies which they need to take into consideration for ensuring smooth business operations, it is necessary to understand the major components of working capital that have to be managed efficiently. The two broad categorisations of it could be identified as current assets and current liabilities, in which there are several elements that have to be keenly managed (Tauringana and Adjapong Afrifam, 2013) . While current assets could be considered as those assets that could be converted into cash within the period one year, the management of this requires a set of activities. On the other hand, current liabilities could be regarded as those claims of outsiders that are expected to mature for payment within a year. Both of these aspects are highly important for businesses and require keen attention.</p>
  <p>Cash could be considered as one of the most important components of current assets and so it is critical for businesses to develop effective cash management strategies (Pandey and Jaiswal, 2011). It is essential that the firm maintains an adequate cash balance in order to ensure smooth business operations and activities. This could be done by managing the inflows and outflows of cash in the business. On the other hand, receivables could be mentioned as another essential component of working capital. The debtors of the firm require keen attention and focus by the companies and it becomes imperative to coordinate and ensure effective collection of money from the ones who owe the business (Agha, 2014). The third important component is of payables, as it is the money that has to be given to individuals outside the business. While creditors play an imperative role in the operational efficiency of a firm, it is essential to keep such individuals satisfied to ensure a steady supply of material. The last essential component is of inventory as it constitutes a major part of total working capital. Efficient management of inventory may lead to maximisation of earnings of the shareholders (Tauringana and Adjapong Afrifam, 2013).&nbsp;</p>
  <h4>2.5 Impact of Working Capital on the Firm's Profitability</h4>
  <p>A number of studies have been conducted to determine how working capital affects the profitability of a firm. Different studies have been carried out in different regions and different sectors. Abbasaali and Milda (2012) stated the result of their study over how working capital affects profitability using few entities in Tehran and indicated that there is a material relationship between working capital and earnings. This study demonstrates that the working capital and profitability of the company have a significant relationship with each other but there is no significant relationship between the working capital and market value of the company. Another study conducted by Mary and Laurie (2010), indicated that inventory has an effect on profitability and return on investment on inventory provides profitability to the company. Melita and Petros (2010), also determined this relationship, it used data of listed entities in Cyprus for the period of 1998-2007 and found that working capital management and earnings of the firm are interlinked. Another study was carried out by Kaddumi and Ramadan (2012, p.217) in which, results revealed that the working capital and the performance of the Jordanian industrial firms have a positive correlation between each other. The regression analysis also explored that the firms follow less aggressive financial policies in the context of working capital that has been adding values to the wealth of the shareholders.</p>
  <p>Vida and Rezvan (2011) assessed how working capital and profit are interrelated using information of 101 companies on the stock exchange of Tehran. Regression and correlation were used for hypothesis testing of the study which concluded that working capital has material relationship and influence on profitability on such companies. Organizations listed on the Stock exchange of Istanbul were also tested by Hasan and Salih (2011) for the period of 2005 to 2009 to show the empirical relationship that working capital has with the profit of a company. The study concluded that the reduction in the cash conversion cycle can affect return on assets. These studies focused on the impact of working capital on profitability in different regions and on companies listed on different stock exchanges. The purpose of mentioning these studies is to highlight the rising concern of researchers towards identifying the impact of working capital on the performances of the firms. By reviewing these studies, positive results can be concluded, however it can be noticed that no research has been carried out in the context of the pharmaceutical industry. Therefore, this study intends to determine the impact on UK pharmaceutical companies. The purpose is to highlight the importance of working capital to enhance the earnings of a company.</p>
  <p>Moreover, with regards to the impact of working capital on the profitability of the business, it must be understood that the impact and importance of it may vary in different industries and companies. While it has been understood that working capital contributes to the performance of the organisation, it is imperative to understand how the impact may vary in different situations (Alavinasab and Davoudi, 2013). In general, all those companies that function in an environment which does not allow them to operate on credit terms and who have the high amount of financial transactions on a frequent basis are keenly concerned with managing working capital. The inability to operate on credit terms mean that the business would require an ample amount of cash to make all sorts of transactions, and for this purpose working capital must be given critical attention and importance.</p>
  <p>Considering the example of textile, garment and leather industries, the need to manage working capital is essential. The amount of transactions in these industries is so high, that the firms operating in the sector have to maintain a considerable amount of working capital. On the other hand, companies in the technology sector do not rely on working capital as they do not have physical products to be sold. This lowers their requirements of possessing working capital and managing the cash flows. Companies operating in the service industry are majorly dependent on their abilities and skills, which earn them their desired profits. In this case, the involvement of money and management of cash flows is considerably low. This being said, organisations in such sectors focus less on maintaining working capital as compared to other industries such as, textile, healthcare, leather and more.</p>
  <h4>2.6 Pharmaceutical Industry of UK</h4>
  <p>The pharmaceutical industry of UK is one of the largest industries in the world. This sector in UK provides jobs in a variety of differnet areas like distribution, manufacturing, R&amp;D and clinical trials and provides employment for approximately 70,000 peple in the country (ABPI, 2011). The manufacturing of the pharmaceutical is one of the very few elements of the manufacturing industry in UK which has gone through a comparatively persistent productivity, employment and output growth in the last decade. Moreover, this sector has the projection of approximately 4% to 10% of growth per year (Kazzazi et al., 2017). The pharmaceutical sector is usually seen to have high spending in R&amp;D and in UK also, this sector has the most spending in the R&amp;D that accounts for approximately 25% of all the investments related to R&amp;D in the UK economy.</p>
  <p>There have been different researches that have been carried out to study the impact of working capital in the pharmaceutical sector. The main reason for which the pharmaceutical sector has been selected for this research is that the leadership of the pharmaceutical firms is not dependent on the innovation of the products but it is dependent on the development of the new products. Therefore, the pharmaceutical industry has to put a lot of investment in the developing new drugs and also have to bear a very high cost of R&amp;D (Mehra, 2013). This is the reason for which studying the effect of working capital in this industry has motivated the researcher to select this industry.</p>
  <p>There is an array of literature available on the impact of working capital on the profitability of the pharmaceutical industries. The study of Sahrif and Islam (2018), which was carried out in the pharmaceutical sector of Bangladesh, revealed that there is a significant relationship between the workig capital and profitability. Similarly, the study carried out by Chowdhury et al., (2018) also showed a positive relationship between the profitability and working capital of the pharmaceutical industry.Another study carried out on the pharmaceutical industry of UK by (Qurashi, 2017) has shown that the leverage and the size of firm has a postitve relation with profitability but the liquidity and growth has a negative relation.</p>
  <h3>Chapter 3: Methodology</h3>
  <h4>3.1 Introduction</h4>
  <p>The target in this section is to portray an in depth assessment of the methodology of investigation engrossed by the author. According to Miller, Mauthner and Jessop, (2012), Research methodology confirms the structure of the whole study and is believed to be an essential measure of the investigation. In addition to that, all the methods and tools that the researcher adapts to perform the specific study are embraced in the research methodology. Furthermore, a set of measures followed to get to the bottom of the research problem organizationally is also conveyed in the section. It does not particularly illustrate the evolution of the methods but also it provides the explanation for electing such approaches (Maxwell. 2012). Following diagram depicts the research flow which was followed in this research,</p>
  <p><img src="data:image/png;base64,[encoded data, 32948 characters]" alt="Methodology Introduction" width="494" height="364"></p>
  <h4>3.2 Research Philosophy</h4>
  <p>A way of explaining the perception, notion as well as the exploration of the derived visions over the approaches initiated is specified in the research philosophy. There are three types of research philosophies named as Positivism, Interpretivism, and Realism, on which the research is grounded generally.</p>
  <p>As stated by Lohr, (2009), the evolution of awareness and the collection of the experiences and attitudes are highlighted in the notion of Interpretivism. In addition to this, it emphasizes on diagnosing the experiences and lucid rationale under the approach of the research. Furthermore, the Positivism philosophy is accommodated when the investigator is aimed to investigate or delve into the conception at the bottom of the investigation. It covers numerous attributes like hypothesis formation, target exploration, and dealing with the research questions. Additionally, it leads the author in the direction of social realism and practices and the justification of the discoveries obtained through analysis (Heit and Rotello, 2010). The realism philosophy highlights the aspects like the placement of regulation and imposition and political norms. Therefore, this specific analysis is intended to be stranded on the philosophy of positivism considering the nature of the study which is mainly related to the financial analysis with the support of statistical methods. Through the inclusion of positivism research philosophy, the researcher was able to conduct an in-depth analysis associated with working capital and profitability of the company. In this context, the observations and findings gathered through positivism were analysed through statistical methods in order to find the relationship between two variables.</p>
  <h4>3.3 Research Approach</h4>
  <p>As stated by Saunders, (2011), the research approaches are classified into two significant types that are deductive approach and inductive approach of research. According to Bryman and Bell, (2015), the deductive approach is acclimated; the researcher initiates from the identification of associated theories, then gather the essential data for inspection and construe the discoveries through such analysis. Therefore, the approach that is aimed to be adapted by the researcher for the analysis of the research concept is deductive. Since the data taken for the research is quantitative in nature, therefore, the deductive approach has been selected for this research. The utilisation of the deductive approach has enabled the researcher for the effective utilisation of the study variables in order to assess the relationship between the two variables selected for this research.</p>
  <h4>3.4 Research Design</h4>
  <p>The foundation of the study on which the entire research is targeted to be evaluated is Research Design. Quantitative research design quantifies the research issues by the evolution of the scope and connotation of association between variables and how one variable influence the other variable and for that it requires numerical data that is calculable (Williams, 2011; Fowler, 2013). Whereas, as the name implies the mixed method stresses equally on quantitative and qualitative data i.e. it involves both the quantification of research issue and the viewpoint of targeted respondents on the notion commenced in the research (Williams, 2011). Therefore, in this research study the researcher is targeted to adopt the quantitative research design to acquire the functional vision of the research notion.</p>
  <h2>3.5 Data Collection Method</h2>
  <p>&nbsp;It is essential to highlight the foundation of data collection in the research study in terms of the reliability and credibility of that foundation or sources. Therefore, the investigator can approach two data collection methods to gather the relevant data referred to as Primary and Secondary data collection methods (Sunders, et.al, 2012). Primary method refers to the collection of fresh data that is not obtained from the previous researches through interviews, experiments, and surveys. Whereas, the secondary is the method in which the data is gathered from existing and open research information like facts and figures from previous literature, websites (World Bank, Stock Exchange, IMF, etc.), Books, and Research papers. Therefore, in this study, the data is gathered from the secondary source relevant to the research issue. The secondary data has been collected from the annual reports of the pharmaceutical companies in the UK. For this purpose, 5 companies have been selected in order to conduct analysis for the variables working capital and profitability. The data related to the selected variables have been collected from the annual reports and Thompson Reuters website which is a database that provides useful financials regarding the company.</p>
  <h4>3.6 Sample Size</h4>
  <p>The suitable number of sources and reactions are the foundations on the investigator finalized the sample size of the research study for the analysis of the research issue. As this study is centred on the quantitative evaluation and the researcher is aimed to access the data from the secondary source for examination; therefore, the investigator determine the sample size of the research study through the number of companies adequate for the evaluation, which means that the sample size is reliant on the number of the reviewed companies. The data or information is aimed to be gathered from the official sites of the companies that are undertaken. The data has been taken from five different pharmaceutical companies listed at stock exchange where ten years of data has been taken for the period of 2008-2017.</p>
  <h4>3.7 Data Analysis Plan</h4>
  <p>Data analysis plan is the method of building the structure, analysis, demonstration and clarification of the research data in order to change and unstructured data into a well-meaning and functional concept and to build up valuable deductions. According to Harwell, (2011), there are various data analysis methods that rely on the environment of analysis required by the researcher. As stated by MacDonald and Headlam, (2011), SPSS (Statistical Package for Social Scientists) is the most ordinary tool used for the quantitative analysis and this tool is often adopted for research studies, however, since SPSS does not support, process and read panel data, hence Eviews 8.0v was used for statistical purposes. Therefore, in this study, the descriptive statistic, correlation test and regression test was conducted through Eviews statistical software. The data gathered for the 10 years was tabulated in the excel sheet in order to conduct analysis on Eviews.&nbsp;</p>
  <h4>3.8. Variables of the Study</h4>
  <p>Dependent Variable: Profitability&nbsp;</p>
  <ul>
  <li>Net profit margin</li>
  <li>ROA</li>
  <li>ROE</li>
  </ul>
  <p>Independent Variable: Working Capital</p>
  <p>-Current Ratio</p>
  <p>-Accounts Receivable</p>
  <p>-Debt/Equity Ratio</p>
  <p>-Inventory Turnover</p>
  <h4>3.9 Ethical Considerations</h4>
  <p>While gaining access to the past literature or awarding new aspects to the prevailing concept, it is essential for the researcher to keep an eye on the ethical codes and rules for the purpose to conduct broad and reliable research. Therefore, the past studies that the researcher accessed are properly quoted and appropriately credited by the researcher of this study. Likewise, the researches that are older than 2010 has not been used by the investigator in order to attain modern and reliable statements. Moreover, it is ensured by the researcher that quantitative and secondary data is gathered from verified and reliable sources to propose reliable outcomes.</p>
  <h4>3.10 Limitations</h4>
  <p>There are certain limitations that can be aroused while directing a research study either in gathering the data or in inspecting the retrieved data. These limitations can influence the outcomes of the study and also limit the room of the research that is being directed. Therefore, some of the limitations that the researcher faced during this specific research study are as follows:</p>
  <ul>
  <li>&nbsp;Budget Limitation: The initial limitation that the researcher faced was a budget limitation as the research is held at an academic level. Therefore, it is difficult and incapable for the researcher to study the present concepts and visions of researches broadly and to acquire an extensive scope of data.</li>
  <li>Time Limitation: An essential element for directing broad research always is Time period. For this study the researcher has limited time which can drive the researcher to access limited data. Moreover, it can lead the researcher to acquire limited previous studies to build the concepts.</li>
  <li>Limitation of Multifaceted Variables: The incidence of human errors and complex or compound expressions that researcher is incapable to comprehend can influence the room of study.</li>
  </ul>
  <h3>Chapter 4: Data Analysis And Discussion</h3>
  <h4>4.1 Introduction</h4>
  <p>&nbsp;This chapter is intended to conduct an analysis of ten years of data of five different publicly listed Pharmaceutical companies in the UK. Meanwhile, based on the objectives and aim of the study, descriptive statistics, correlation test, and regression test were conducted. Furthermore, it is also important to mention that Eviews 8.0 was used for these statistical tests; since collected data was panel data that SPSS cannot read and process. Meanwhile, the following chapter provides analysis of results, and conducts a discussion of objectives to highlight how each objective is achieved by means of primary and secondary findings.&nbsp;</p>
  <h4>4.2 Descriptive Statistics</h4>
  <p><strong>Figure 1 Descriptive Statistics Result</strong></p>
  <p><strong><strong id="docs-internal-guid-98b87516-7fff-1d58-0483-607404538d42"><img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe2gAmv7c8JM8K0eVW76x-DnnWidJqHpdiDr3RwUbKFWRdpaw1S-vzQ89-ObyAJuLVnH7ytXaSHiRTyJ_PTgWtr7s2KTMMkreEbDu0BbMIO7vrmdSQVHkVpw62Jz_1yxI7cpJqpIFV4FxLxBJVml2E?key=Ln6CoBZiCPqe5je20d4F0Q" alt="Descriptive Statistics Result" width="624" height="74"></strong></strong></p>
  <p>Mean return on equity (ROE) of the selected companies is 0.22, which means each company on average has 22% (ROE), and 7.1% return on assets (ROA). However, the table also shows that ROE and ROA may deviate by &plusmn;0.31, and &plusmn;0.055 respectively. It can be further analysed that ROE and ROA may increase or decrease by &plusmn;31%, and &plusmn;5.5% which is the standard deviation of the ROE and ROA. Furthermore, the mean net profit margin of a given company is 15.18% with a standard deviation of &plusmn;8.9%. It shows that the mean net profit margin of the given company might increase or decrease by &plusmn;8.9%. It is also identified that in panel data, the minimum net profit margin is -15% and the maximum profit margin is 35%. It implies that the net profit margin depends on the size of the company, nature of the business, and revenues growth. Based on these characteristics net profit margin is affected positively or negatively.</p>
  <p>Mean inventory turnover is 2.5 with a standard deviation of 1.25; and minimum inventory turnover is 1 and maximum inventory turnover found 8.3. It can be analysed that average inventory turnover is 2.5 which can be increased or decrease by &plusmn;1.25. However, this is very low which indicates inefficiency of the firm to make sales, and the inability of the company to change its inventory into the sales. However, as per the Mary, John, and Laurie (2010) lower inventory turnover may also be due to the nature of the business, and type of industry. This is also supported by a reported generated by Calc Bench Inc in 2013, that average inventory turnover of the pharmaceutical industry is 2.4. Hence, it can be stated that the result of inventory turnover is consistent with secondary findings.</p>
  <p>Furthermore, the mean debt to equity is 1.04 with a standard deviation of 2.8, and the mean current ratio is 2.01. On the other hand, mean accounts payable in days is 145 with a standard deviation of 103. It means company payback venders and suppliers within 145 days. It can be analysed that for debt to equity ratio, on average each firm owns &pound;1.04 over each &pound;1 in the equity; it means that the company has more debt than its equity. Meanwhile, debt to equity was also included into the study to measure to what extent capital structure plays a role in affecting the profitability of the firm. However, the mean current ratio is attractive that the company can meet with its current liabilities obligations twice.</p>
  <h4>4.3 Correlation Coefficient&nbsp;</h4>
  <p>The correlation coefficient is also known as only coefficient as observed in literature and discussion in academic papers. It is defined by Schober Boer and Schwarte (2018) that correlation is a statistical measure of the relationship between two or more quantitative variables. It is conceptualized that correlation assist in defining and determining the statistical association between the variables. Meanwhile, in order to determine the correlation coefficient between the variables of the study, the correlation test through Eviews was conducted. See the result of the test below</p>
  <p><strong>Figure 2 Correlation Results</strong></p>
  <p><strong><strong id="docs-internal-guid-5331a1a6-7fff-c2d0-fabb-ef8f11e4d0d4"><img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfDQTnf_wD8Mide2AwsJPQAqhE8NkrCNRKTxDR3Wj2RtKPtpLtgMOoN5KdlPGpxglYvfRoHrgcwQH2nHGzcoQjhXOfB53GbtjgiWql8fs0O86tw69GZpDp_dZwTD1ymBPTlYJjtCXYPpNLLlTz3f3w?key=Ln6CoBZiCPqe5je20d4F0Q" alt="Correlation Results" width="671" height="136"></strong></strong></p>
  <p>The result above determines two important properties of correlation; the strength of the relationship, and nature of the relationship. The strength of the relationship refers to either relationship is strong or weak, or strength of the relationship is determined through coefficient. If the correlation coefficient is between 0.3 to 0 then the relationship is described as very weak. Similarly, if the coefficient is greater than 0.3 and less than 0.5 then the relationship is described as weak (Gogtay and Thatte, 2017). On the other hand, if the correlation coefficient is between 0.8 to 1 then the relationship is described as very strong, and if the coefficient is between 0.5 to 0.8 then the relation is described as strong only.</p>
  <p>Furthermore, referring to the type of relationship, it is determined through a negative or positive coefficient. If the coefficient has a negative sign then the relationship is stated as negative. In contrast, the absence of negative (-) sign is indicative of a positive relationship (Schober Boer and Schwarte, 2018). Meanwhile, referring to the correlation result the correlation coefficient between ROE and ROA is 0.60 which indicates a positive and strong relationship. Hence, it is stated that a change in the ROE will also bring a change in ROA extent to strength of relationship and as per the direction of the relationship. However, there is no direct relationship between both variables, since there is a moderator or mutual variable in both measures of profitability that affects the relationship as also stated by (Kabajeh, Al Nuaimatand Dahmash, 2012). This moderator variable is the net profit, which if changes direction then relationship between ROE and ROA will also be affected.</p>
  <p>This is also a major reason that has created a strong positive relationship between ROE, ROA and net profit margin. Furthermore, ROE, ROA, and net profit margin have a weak relationship with the inventory turnover, which implies that a positive change in the profitability will bring a negative change in the inventory turnover. However, inventory turnover is a measure of a company's ability to replace its inventory in a given period and return on assets and equity are the measure of firm's efficiency to generate the return on assets and capital employed. Hence, it can be determined that a positive change in inventory turnover should translate and reflect higher revenues; net profit hence should also increase the ROE and ROA. It is because, higher inventory turnover means company has been replacing its inventory multiple times, hence revenues and net income tend to increase positively.</p>
  <p>In contrast, inventory turnover has a weak negative relation with profitability in the case of the pharmaceutical industry in the UK. Thus, it can be stated that high inventory turnover in the Pharmaceutical industry tends to increase costs in proportion to revenues. Hence, ROE and ROA are affected negatively regardless of the increase in the revenues. Apart from this, this is can also be analysed in another direction that a positive change in the inventory turnover will bring a negative change in the ROE, ROA, and net profit margin based on the effect of increase costs. Furthermore, ROE has a weak positive relationship with the debt to equity, which implies that a positive change in the ROE will also increase the debt to equity extent to the strength of their relationship. This is a usual and natural association between variables given that a positive change in the ROE means an increase in net income, which will increase the ratio.</p>
  <p>However, referring to the studies, the researchers had found different relationships between ROE and debt to equity ratio, where one concluded positive relation in case of the banking industry (Velnampy and Niresh 2012), and another concluded a negative relationship in case of the textile industry (Iqbal and Usmanm 2018). Similarly another study conducted by Lenka (2017) found a negative relationship between ROE and debt to equity in case of construction and agriculture industry. Therefore, based on the industry the relationship might differ, hence, based on the primary findings of the following research it can be stated that relationship between ROE and debt to equity ratio in case of Pharmaceutical is positive. However, ROA and net profit margin have a negative weak relationship; hence a decrease in the debt to equity ratio will enhance ROA and net profit margin. It implies that if liabilities or debt portion increases then profitability is negatively affected in the case of Pharmaceutical industry UK.</p>
  <p>Meanwhile, it is determined the debt to equity ratio and its relationship with the profitability differs by industry. Meanwhile, in case of pharmaceutical industry, ROE has negative relation, and other measures of profitability has positive relationship. It implies that change in the debt to equity can bring a negative change in the ROA, but will bring positive change in the other measures of revenues. This finding is also consistent with the study of Lenka (2017) that found negative relation of ROA with debt to equity. Similarly, the current ratio only has positive relation with the ROA, but other reassures have negative relation. It implies that improvements in the working capital can bring a positive improvements in the ROA at some extent. Hence, pharmaceutical company should focus onto improve working capital conditions to support profitability.</p>
  <p>The relationship between the current ratio and ROE is weak negative, which means a positive change in the current ratio will bring a negative change in ROE extent to the strength of the relationship. It is because an increase in the current ratio is influenced by either increase in current assets or decline in the current liabilities. In each case, the portion of liabilities tend to remain low as compared to current assets; hence proportionately rising current ratio tend to affect ROE negatively. On the other hand, ROE and net profit margin have a positive but weak relationship with the current ratio. It is can analyse that a positive change will be brought by the current ratio in the ROA and net profit margin; it is because the rising net current ratio is indicative of higher current assets, which reflects company&rsquo;s increased and improved performance. Hence, ROA and net profit margin tend to increase consequently. Lastly, accounts payable in days has a positive but weak relationship with the profitability of the firm. Hence, a company negotiating with the suppliers and vendors over a longer payment schedule can enhance their profitability.</p>
  <p>Furthermore, cash cycle in days has weak negative relation with ROA, and account receivable turnover also has negative relation with the ROA. However, cash cycle has positive but very weak relation with ROE, and also negative weak relation with account receivable turnover. Furthermore, revenues also have positive and strong relation with cash cycle and weak negative relation with accounts receivable. This implies that cash cycle has will influence a negative change in the ROA if it increases, but ROE, revenues, and NPM are positively associated; hence change will also be positive extent to strength of relationship. On the other hand, accounts receivable negative relation with the ROA, ROE, revenues and net profit margin. This indicates that if accounts receivable turnover increases then ROE, ROA, revenues and net profit margin will decreases, and vice versa.</p>
  <p>Meanwhile, it can be concluded that ROA, ROE, revenues and net profit margin has weak negative relation with inventory turnover with coefficient of -0.19. Similarly, the these profitability measures also has positive and negative relationships with debt to equity , where only ROA has negative relation, but in contrast ROE, revenues and NPM has positive weak relationship. Therefore, it can be determined that profitability of the Pharmaceutical industry in UK has positive and negative relations with the independent variables. Therefore, firms need to achieve an optimal capital structure which can improve profitability.&nbsp;</p>
  <h4>4.5 Regression Analysis</h4>
  <p>Regression is defined as a statistical technique or a statistical model which is used to estimate the relationship between two variables and to determine the impact of independent variables on the dependent variable. Meanwhile, is a technique which formulates and utilizes the statistical model to run the test in order to estimate relationships (Kumari and Yadav, (2018). It is further observed that there is always one dependent variable in the model, but independent variables may be more than one. It is because; the regression model uses multiple independent variables to predict the dependent variable. Hence, for multiple dependent variables multiple regression models have developed accordingly. Therefore, the following study also has multiple dependent variables; hence following regression models were developed</p>
  <p>ROA = &beta;0 +&beta;1 INVT+ &beta;2DdebtEquity+ &beta;3 CR + &beta;4 AP_Days+&beta;5 ARDays+&beta;6 Cash cycleDays+&beta;7 Revenues</p>
  <p>ROE = &beta;0 + &beta;1 INVT+ &beta;2DdebtEquity+ &beta;3 CR + &beta;4 AP_Days+&beta;5 ARDays+&beta;6 Cash cycleDays+&beta;7 Revenues</p>
  <p>NPM = &beta;0+ &beta;1 INVT+ &beta;2DdebtEquity+ &beta;3 CR + &beta;4 APDays+&beta;5 ARDays+&beta;6 Cash cycleDays+&beta;7 Revenues</p>
  <p><strong>Figure 3 Regression Model 1</strong></p>
  <p><strong><strong id="docs-internal-guid-241eb463-7fff-85c2-d274-a7ab31eddfb1"><img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdHwFD4lzsQaTU4iEesL9n3jvxccLdJqX8Jt8qr2i-GfTRvDovmB6kGcaFvNjmQlOqdpJSkqZarv8GyOlmdXAjJtqcrxi4zdaNnP4ndqXuNM2ij3zNxwqICVlleLTq2EwXx5mymVeCL-pDQ-_vb32M?key=Ln6CoBZiCPqe5je20d4F0Q" alt="Regression Model 1" width="447" height="407"></strong></strong></p>
  <p>Referring to the result above, it is the outcome of the first regression model for predicting ROA. The R-Squared of the model is 0.399, which means 39.9% of ROA is predicated by inventory turnover, debt to equity, current ratio, accounts payable in days, account receivable turnover, cash cycle in days, and revenues. However, it can also be analysed that remaining portion of the ROA which is 0.601 or 60.1% is predictable by some other variables which are not included in the model (Hamilton, Ghert and Simpson, 2015). Meanwhile, r squared is also indicated how well data is close to fitted regression line, since r squared is 39.9%, thus it can be stated that 39.9% of the data is close fitted regression line.Meanwhile, one unit of change in the inventory turnover, debt to equity, current ratio, accounts payable, accounts receivable, cash cycle in days, and revenues will bring a change of -0.007, -0.0003, 0.024, 0.000, -0.0102, -7.82e-06, and -9.70E-07 respectively. However, considering the individual p-value of each coefficient, p-value of inventory turnover is 0.08, debt to equity 0.63, current ratio 0.195, and account payable turnover 0.47, account receivable turnover is 0.051, cash cycle 0.53, and revenues 0.17. Since, p-values of all variables are greater than alpha 0.05, hence it can be stated that no variable has statistically significant impact on the return on assets (ROA). Therefore, it can be determined that ROA is not influenced by any of the selected independent variables.</p>
  <p><strong>Figure 4 Regression Model 2</strong></p>
  <p><strong id="docs-internal-guid-7b1ee42f-7fff-336b-3f34-eb5105ca40f8"><img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfwNS3yKFt5geN6q-ife58jISFa3PqBKJIxLeBEKXNLJ-HOUBvotlxJ7NTGjrvO8GrRn7HkjqWdgEZI9uUIBvexmo_IgbZOquM4EQJsgUB5Q-47lvFhHA-SV5AOgstUq_k-C7DJgPy8AMcFa7g_1DY?key=Ln6CoBZiCPqe5je20d4F0Q" alt="Regression Model 2" width="448" height="412"></strong></p>
  <p>The result above is the outcome of the second regression model of predicating ROE. The R-Squared of the model is 0.256, which implies that 25.6% ROE is predicated by inventory turnover, debt to equity, current ratio, accounts payable in days, account receivable turnover, cash cycle in days, and revenues. However, it can also be analysed that the remaining portion of the ROE which is 0.744 or 74.4% is predictable by some other variables that have not been included in the model. Meanwhile, r squared also indicates that 25.6% of data is closely fitted with the regression line. Furthermore, referring to individual p-values of each coefficient, then p-value of inventory turnover is 0.08, debt to equity 0.83, current ratio 0.084, and account payable turnover 0.25, account receivable turnover is 0.045, cash cycle 0.68, and revenues 0.10. Since, p-values of inventory turnover, debt to equity, current ratio, accounts payable turnover, cash cycle and revenues is greater than alpha 0.05, hence it can be stated that there is no significant impact positive or negative impact of these variables on the return on equity (ROE). However, only accounts receivable turnover has p-value less than alpha, hence it can stated that there is significant impact of accounts receivable turnover on the return on equity (ROE) all variables are greater than alpha 0.05, hence it can be stated that no variable has statistically significant impact on the return on assets (ROA).</p>
  <p><strong>Figure 5 Regression Model 3</strong></p>
  <p><strong><strong id="docs-internal-guid-0a9551b0-7fff-f6e1-552b-044c030d594b"><img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdY6Gwoi6vWBuRug5BnWIiOtFPh_kfHmFB00ZRKulXsfaPrI9BwQYZzHY5KhRyUTFPBBHfylzgRWj8Bxvu5QrvZJ6W1tofWux8_--1GlieXrm3PXBkLkchfA007k2naitAZPSSvpELHi9YnCFQ32jQ?key=Ln6CoBZiCPqe5je20d4F0Q" alt="Regression Model 3" width="445" height="404"></strong></strong></p>
  <p>Referring to the result above, it is the outcome of a third regression model of predicting net profit margin. The R-Squared of the model is 0.471, which means 47.1% net profit margin is predicated by inventory turnover, debt to equity, current ratio, accounts payable in days, account receivable turnover, cash cycle in days and revenues. However, it can also be stated that the remaining portion of the net profit margin which is 52.9% or is predictable or explainable by some other variables that are not included in the model. Meanwhile, r squared is also indicated 47.1% data is closely fitted with the regression line.</p>
  <p>Similarly, one unit of change in the inventory turnover, debt to equity, current ratio, and accounts payable in days, account receivable turnover, cash cycle in days and revenues will bring a change of -0.034, -0.0042, 0.0287, 0.0001, -0.014, 2.76e-05, and -6.60e-07 respectively. However, considering the individual p-value of each coefficient, then p-value of inventory turnover is 0.005, debt to equity 0.27, current ratio 0.227, and account payable turnover 0.53, account receivable turnover is 0.124; cash cycle 0.66, and revenues 0.56. The p-value of debt to equity, current ratio, accounts payable turnover, accounts receivable turnover, cash cycle, and revenues is greater than alpha 0.05; hence impact of these variables on net profit margin is not statistically significant. However, only p-value of inventory turnover is 0.00 which is less than alpha significance, hence it is determined only inventory turnover has negative and statistically significant impact on net profit margin. It implies that net profit margin is negatively influenced by inventory turnover. It means that net profit margin is only negatively influenced by inventory turnover; where a positive change in inventory turnover will bring a negative change in net profit margin. Similarly, revenues have also insignificant impact on the net profit margin, where model is significant; it implies that there is problem with the data in terms of range and length as stated by Lin et al (2013). Where authors also argues that low number of observations in regression tend to provide irrelevant or insignificant results; thus maximum number of observations should be taken to ensure reliable results with consistent data.</p>
  <h4>4.6 Discussion of Objectives</h4>
  <h5>4.6.1 Objective 1: To understand the concept of working capital&nbsp;</h5>
  <p>The first objective that had been proposed by the researcher is in understanding the concept of working capital. The first objective that had been developed is theoretical in nature and had been achieved through analysing the literature. The term working capital refers to the funds in which the organization is able to meet the short-term and long-term obligations. Similarly, Mathuva (2015) has defined working capital as the ability for paying the liabilities of the business as well as increasing the current assets of the organization. Moreover, the study of Makori and Jagongo (2013) has explained working capital as the difference between the current liabilities and current assets. Companies that have effective working capital are able to pay-off their short-term liabilities within a one-year time period. On the contrary, companies that have poor working capital are unable to pay off their liabilities within a year and faces difficulty in running their operations smoothly. Similarly, the study of Raheman et al. (2010) has highlighted that the working capital of manufacturing and distribution firms has a significant impact on the profitability and liquidity of the company.&nbsp;</p>
  <h5>4.6.2 Objective 2: To determine how working capital can be managed efficiently by a company</h5>
  <p>The second objective that had been established by the researcher was to determine how the working capital can be effectively managed by the company. The objective had been achieved through analysing the literature in which it had been indicated that there are mainly two types of categories that need to be effectively monitored which are balance sheet and operating cycle. The monitoring of the balance sheet and operating cycle supports the company in effectively managing the working capital in terms of growth and survival. Similarly, the study of Makori and Jagongo (2013) has indicated that businesses should focus and monitor all the aspects of the financial performance in order to maintain financial health.</p>
  <h5>4.6.3 Objective 3: To identify the components of working capital</h5>
  <p>The third objective that had been proposed by the researcher was to identify the components of the working capital. The objective that had been developed by the researcher was theoretical in nature and had been successfully achieved through reviewing the literature. According to the study of Tauringana, Adjapong and Afrifam (2013), the components of the working capital consist of two broad categories which are current assets and current liabilities. The current assets are those assets of the company that can be easily converted into cash within a one year time period. On the other hand, the current liabilities are those claims that are needed to pay within a year. Therefore, both of these aspects are highly critical for the organization in which high attention is needed on both of these components. One of the most important components of the current assets is cash which helps in the development of effective cash management strategies. It is imperative for the business to have adequate cash balance for ensuring that the operations of the business run smoothly. Another important component of current assets is receivable in which the money is collected from the business for providing goods or services on an account. The last important component is account payable, in which the amount of money that has been owned by the creditors is required to be paid for improving the efficiency of the firm.</p>
  <h5>4.6.4 Objective 4: To determine the effect of working capital on profit in general</h5>
  <p>As it is defined and discussed earlier that working capital is an amount of money which is maintained by firms to meet with the short-term liabilities, obligations and also critical to continue to the daily operations. In this regards, it can be argued in light of Mathuva (2015) that working capital is often measured in current ratio, which is result of current assets minus current liabilities. A company with ratio of 2 indicates that company can meet with its short-term liabilities twice, and it also has sufficient short-term assets with sudden need of capital to continue operations. Similarly, sufficient and enough working capital increases operational efficiency to carryout operations timely, and helps to maintain the financial health. Hence, a study conducted by Sagner, (2010); Agyei-Mensah, (2010); Enqvist, Graham and Nikkinen (2014) defined and used working capital as a measure of firm&rsquo;s efficiency to continue operations. Based on these arguments, it can be determined that there is direct and significant impact of working capital on the firm&rsquo;s profitability.&nbsp;</p>
  <h5>4.6.5 Objective 5: To assess the influence of working capital on earnings of pharmaceutical companies in UK&nbsp;</h5>
  <p>It is conceptualized that generally working capital positively influences earnings and profitability of the firm. Meanwhile, since, there are different measures of working capital and profitability, regression test was conducted to determine impact of working capital on the profitability of the firm. Meanwhile, it is found that ROA is only significantly influenced by current ratio and ROE is not influenced by any component of working capital such inventory turnover, debt to equity, current ratio, accounts receivable, cash cycle in days and accounts payable in days. On the other hand, revenue as independent variable also did not affect ROA, ROE, and net profit margin significantly, which indicates problem with the sample size and observations. However, net profit margin is significantly influenced by inventory turnover, current ratio, and accounts payable in days. Meanwhile, it is found that ROA and net profit margin of the companies in Pharmaceutical industry of UK is positively affected by working capital.</p>
  <h3>Chapter 5: Conclusion And Recommendations</h3>
  <h4>5.1 Introduction</h4>
  <p>The current study was aimed at assessing the influence of working capital on profitability of the pharmaceutical sector of UK and the current chapter has been written with the purpose of providing a conclusion based on the findings of the current research. This chapter has discussed the fulfilment of the major aims and objectives of the study and has concluded the entire study highlighting the insights gained. Furthermore, the current chapter has also provided some recommendations based on the concluded points of the current research. The major strengths and limitations of the current study along with its future implications have also been clearly mentioned in this chapter. Finally, this chapter has also indicated the areas in which future researches can be carried out.</p>
  <h4>5.2 Conclusion</h4>
  <p>The major objective of the current research study was to ascertain the influence of the working capital on the profitability of a company by studying the pharmaceutical sector of UK. This broad objective was broken down into different brief objectives on order to make the major objective more achievable. The brief objectives were designed by taking the major objective of the study into consideration and included the overall understanding of the working capital concept, identification of the ways to effectively management of working capital, determining the various components of working capital and their effect on the profitability in general and in relation with the pharmaceutical industry of UK.</p>
  <p>For the purpose of achieving the objectives of the study, a review of the current thinking was carried out to develop an overall understanding of the topic under study and to find out the various aspects that relate to the particular concept. The literature review revealed the variables of the working capital and profitability that can be studied to examine the relationship between the two. The review of the current thinking established that the working capital is significantly important for the companies in order to increase their profitability. However, the effect of working capital on the profitability of a company is subject to the type of the company and the type of the industry in which the company operates. Therefore, as the current study was aimed at assessing the working capital influence on profitability of the pharmaceutical industry of UK, a secondary data collection was carried out to gather the data of pharmaceutical industry.</p>
  <p>The secondary data was gathered form the annual reports of the 5 pharmaceutical companies operating in UK and then years data was collected from 2008 to 2017. In order to achieve the objective of the current research and to aid effective analysis, the dependent variable of study i.e. profitability was assessed by net profit margin, ROA and ROE whereas the independent variable i.e. working capital was examined by the variables of current ratio, accounts payable, debt to equity ratio and inventory turnover. After this, the data form the annual reports regarding the above mentioned variables was gathered and analysed to check the relationship between the dependent and the independent variables.</p>
  <p>After the collection of the data, different statistical tools were applied to the data which included descriptive statistics, correlation analysis and regression analysis. The results of the descriptive statistics revealed that the average ROE of the selected companies was 22 percent, average ROA was 7.1 percent and their average net profit margin was 15.18 percent. On the other hand, the average inventory turnover was identified to be 2.5, average accounts payable were 145 days, debt to equity ratio was 1.05 and the average current ratio was 2.012. Based on these findings, it can be inferred that the working capital of the pharmaceutical companies is giving positive indications and the profitability of the companies is also positive.</p>
  <p>In addition to this, the analysis of correlation and regression put forward the findings that the account receivable turnover and inventory turnover have a statistically significant impact on the ROE and net profit margin respectively whereas all the other determinants of working capital have no significant impact on the determinants of profitability. Therefore, it can be concluded based on the findings of the current research that the components of working capital such as accounts receivable and inventory turnover have significant impact on the profitability of the pharmaceutical companies operating in UK. This is because the accounts receivables and the inventory turnover are the major determinants of the working capital due to which the impact of these variables is important in determining the relationship between profitability and working capital.</p>
  <p>The analysis carried out in the previous chapter of the current research study has completely achieved the objectives of this study as the impact of the working capital of the pharmaceutical industry on the profitability have been examined. The findings of the current research can be supported by the findings of the study carried out by Salih (2011) which stated that the cash conversion cycle which is the determinant of working capital has a significant impact on the return on equity which is the determinant of the profitability. Similarly, there are various other researches available in the literature that can be used to strengthen the findings of the current research (Kaddumi and Ramadan, 2012, p.217; Rezvan, 2011; Mary and Laurie, 2010).</p>
  <h4>5.3 Recommendations</h4>
  <p>The current study has provided the conclusion that the working capital of a company has a significant positive impact on the profitability of the company in the pharmaceutical sector of UK. The companies which have developed a mechanism of effectively managing their working capital have seen a positive change in their profitability. Therefore, based on the findings obtained in the current research, the recommendations that can be provided are as follows:</p>
  <ul>
  <li>The current research has established that the efficiency of the working capital management can prove to a significant element for increasing the profitability of the company. Therefore, the companies should focus on bringing the period of inventory conversion, average period of cash collection and conversion cycle of cash down to a desirable level along with the improvement in the average period of payment, so that they can significantly raise their levels of profitability.</li>
  <li>The pharmaceutical companies should also have an adequate amount of cash so that they can easily pay off their current liabilities. This can be done by decreasing the period of their cash conversion cycle. This is important because the firm&rsquo;s current assets should exceed the current liabilities in order to ensure increased profitability. The pharmaceutical companies which have a high time period of receivables that is receivable turnover often have higher time period of payables. This shows that the firm lacks the ability to pay back its current liabilities on time and affects the profitability.&nbsp;</li>
  <li>The efficient management of working capital has proven to be extremely beneficial for the companies in increasing the value of their shareholders. Therefore, the companies should utilise great amount of their available resources to develop effective policies to manage their working capital because without focus and effective polices, working capital cannot be used to positively impact the profitability.</li>
  </ul>
  <h4>5.4 Strengths and Limitations of Research</h4>
  <p>The current study has analysed the capital structure of the pharmaceutical industry with respect to the profitability of the same industry. The pharmaceutical sector of UK is a major sector and the findings of this research can have significant implications for this sector. Moreover, the current study has analysed different aspects of working capital and profitability in order to determine the relationship, which is one of the major strength of this research. Apart from this, the findings of the current study have been supported by different studies available in the literature which can also be considered as a significant strength of this research.</p>
  <p>On the other hand, there are also some of the limitations of the current study. The current study has examined the effect of working capital on some aspects of the profitability of the pharmaceutical sector which is one of the limitation of the study as there are some other determinants of profitability also that were not taken into account in this study. Furthermore, the current research has been carried out specific to the pharmaceutical sector only which has also limited its scope. Therefore, its findings may not be applicable to any other sector. Finally, the current study has also geographical limitations as it was carried out on the pharmaceutical sector of UK only due to which its results may not be applicable to pharmaceutical industry of any other country.</p>
  <h4>5.5 Avenues for Future Research</h4>
  <p>The current research was specific to the assessment of the influence of the working capital on the profitability by studying the pharmaceutical sector of UK. Therefore, there are some areas that the current research has not covered. The future researches can take into account other sectors than pharmaceutical such as retail and restaurants as they often have a negative working capital because of the reason that their customers pay cash up front. For this reason, studying the impact of working capital of these sectors on profitability can have significant implications. Furthermore, studying the impact of working capital on business valuation in the pharmaceutical sector can also be an avenue of future research.</p>
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meta_description:
  This research serves the purpose of determining how working capital management impacts the profitability of a firm.


