Pakistani Auto Sector

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Corporate Finance Term Report
Semenster : Fall 2012
Influence of War on Terror and Law and Order Situation on Profitability of Pakistani Companies.

Submitted to: Jamal Zuberi
Group Members:
Madiha Shakil (9796)
Marium Zehra (9802)
Tooba Khalid (9799)
Date: 26th DEC., 2012

“Influence of War and terror and Law and Order situation on Profitability on Pakistani Comapnies”

“Research Paper”

MADE BY:
Tooba Khalid-9799
Madiha Shakil-9796
Marium Zehra-9802

SUBMITTED TO: Sir Jamaal Zubairi
SUBMITTED ON: DECEMBER 26TH ,2012

This research report has been written only for educational purpose by the above mentioned student of Institute of Business Management. TABLE OF CONTENTS
TABLE OF CONTENTS2
I. ABSTRACT3
II. INTRODUCTION3
II A. BASICS OF RESEARCH DISCUSSION3
III. LITERATURE REVIEW4
IV. METHODOLOGY6
V. SOURCE OF DATA6
VI. SAMPLE SIZE6
VII. DEPENDENT & INDEPENDENT VARIABLES DESCREPTION7
Dependent Variable7
Independent Variables7
VIII. HYPOTHESES8
XI, STATISTICAL TOOL9
X. EMPIRICAL RESULT & ANALYSIS OF FINDINGS10
XI. CONCLUSION18
Appendix-A19
XII. REFERENCES22

I. ABSTRACT
The purpose of this research paper is to determine whether war on terror, law and order situation and drone attacks have any effect on the profitability of the firm. For this five companies from the automobile sector of Pakistan were taken as sample namely, Atlas Battery, Indus Motors, Atlas Honda, Honda Atlas and Pak Suzuki. The bomb blasts per year during 2006-12, number of killing in bomb blasts per year since 2006, drone attacks per year during 2006-12 and number of killings per year in drone attacks during 2006-12 were taken as independent variables whereas; change in sales, gross profit, operating profit, net profit, book value and market capitalization were taken as the dependent variables. Seven year data was gathered to observe the relation. Hypotheses were developed to define the relation between the independent variables and the dependent variables. The hypotheses were than analyzed and tested using MS Excel and SPSS. On the basis of results given by MS Excel and SPSS conclusion was drawn. This article is divided into three sections. In section 1, introduction and basics of research are defined, methodology and empirical data are dicussed in section 2. Results and conclusion are discussed in section 3. Key words: net sales, operating profit, net profit, book value, closing price, bomb blast, drone attacks II. INTRODUCTION

The War on Terror is an international military campaign that first begun in 2001 mainly by the United States, as a result of the 9/11 incident. The campaign's purpose is to eliminate al-Qaeda and other militant organizations. Its’ inception in Pakistan can be dated in 2002 under the government of Pervez Musharraf. Over the years the country has faced many problems due to this war on terror. The defense and military expenditure has increased tremendously. Many people, military plus civilians, have died at the expanse of this war. As much as Rs. 5,036.8 billion have been spent on the war in Pakistan alone. It has affected not only the economy but also the living of all the people in this country. Over the decade, safety of life, law and order situation in Pakistan has worsened by a large degree. In light of all these negative impacts of the war, our report’ purpose is to analyze the effects of war on terror on the profitability of Pakistani companies. More specifically stating, our report studies the bomb blasts per year during 2006-12, number of killing in bomb blasts per year since 2006, drone attacks per year during 2006-12 and number of killings per year in drone attacks during 2006-12 (as independent variables) in relation with change in sales, gross profit, operating profit, net profit, book value and market capitalization (as dependent variables). II A. BASICS OF RESEARCH DISCUSSION

Terrorism in Pakistan has become the most destructive...
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