Working Capital Management Study: Pharmaceutical Sector Analysis

This report provides an in-depth analysis of working capital management within the pharmaceutical industry, with a specific focus on Pfizer. The study examines the company's current assets, current liabilities, and overall liquidity position, aiming to understand the efficiencies of working capital management and suggest improvements. The report utilizes secondary research, including financial data from 2015-2019, to assess trends and ratios, such as current assets and liabilities. Key objectives include examining interrelationships, scrutinizing efficiencies, analyzing working capital components, and assessing liquidity. The conclusion highlights the importance of effective working capital management for maintaining financial stability and recommends regular monitoring and strategic inventory management. The report also provides recommendations for improving financial officers' access to financial dashboards.

Pharmaceutical industry is a industry in
which development, discovery, production
f various drugs in market is done in order
to administer patients in order to cure
them from the ailment. There are generic,
brand medications and medical devices
included in it. There are a number of laws
judging pharmaceutical companies. The
Pharmaceutical company of UK is
employing a total of 73000 people and
also contributed high sums towards £8.4
billion. Two companies GlaxoSmithKline
and AstraZeneca are in fifth and sixth
position of being largest companies in the
by market shares worldwide. In UK
MHRA is governing pharmaceutical
industries. There are a number of
challenges faced by pharmaceutical
companies in UK due to uncertainty that is
brought in by BREXIT. They are majorly
affected by investment decidions that have
been postponed due to introduction of
Working Capital
Management Objectives/Purpose
Mental wealth professional exchange and applied research
(A study of impact of social media on consumer behaviour)
Pfizer is considered to be one of the
world's innovative bio pharmaceutical
company which have successfully
developed 170 kinds of vaccines which
is helping to improve a number of lives.
It was founded in 1952. the headquarter
of company is located in Tadworth,
Surrey, united Kingdom. Pfizer is the
parent organization for Pfizer UK.
● 1) To examine the pattern
1)To examine the pattern of
working capital in select
organisation.
2) To scrutinise the efficiencies
of working capital management
of Select organisation.
3) To analyse the parts of
working capital of chaosen
organisation.
4) To assess liquidity position
of units under concentration.
5) To make suggestions for the
better working capital
management of selected units.
Introduction of
pharmaceutical industry
Background
Working capital management corresponds to the
issues that emerge in endeavoring to deal with
the current resources, the current liabilities and
the interrelationship prevailing between them.
The term current has special connotation with
assets, in the normal state of business, which can
or will be, transformed into hard cash in phase
of one year that also without understanding a
lessening in value and disturbing the activities
of the firm. Liabilities proposed to be paid from
the current earnings or assets at the initial span
of a year are considered Current liabilities. With
the objective of sustaining satisfactory working
capital, management of working capital aims to
strategically operate the firms, current assets
and liabilities. Effective management of
working capital is essential for any venture as,
in absence of it, ventures fail to sustain a
satisfactory working capital which compels the
firm to go insolvent and later, in some cases,
bankruptcy.

Mental wealth;professional exchange and applied research
(A study of social media on consumer behaviour )
There are a number of different parts
that are included in working capital.
Working capital consists of current
assets, current liabilities and so on. The
current assets include stock, debtor,
account receivables, cash and bank. On
the other hand, current liabilities
include bills payable, creditor bank
overdraft and so on.
To assess liquidity position of units
under concentration.
Liquidation position refers to the
difference in an organisation between
all the liquid assets along with the cash
that is inflowing in the organisation. It
is specifically defined for a specific
period which refers to being the
measure of the liquidity risk of
organisation.
Liquidity basically means the freedom
from which an asset of organisation or
any of its security can be easily
converted into cash that is already
ready and its market price is not
affected due to it.
Materials Models
It has been identified that there
are two types of methodologies
which are qualitative as well as
quantitative where both types
are quite effective. In the present
research, quantitative method is
used by researcher in order to
collect all the numerical data
within stipulated time frame.
This will assist in conducting the
whole study in an effective
manner and developing positive
outcome within given time
frame.
Review of Literature
To examine the pattern of working capital in
select organisation.
The net working capital of Pfizer is $
15.386 billion. There are a number of
sources of working capital present with the
organisation it is necessary for them to be
sure that they are effectively fulfilling the
needs of all the short term liabilities in order
to keep their working capital positive.
To scrutinise the efficiencies of working
capital management of Select organisation.
The efficiency of working capital of
Pfizer is successfully helping the
organisation. When checking on net
working capital for company in fiscal years
from 2015-2019 it averaged to $2.512
billion. They are successfully operating at
median level of working capital from last 4
years. The net working capital of Pfizer is
peaking at June and low in December.
To analyse the parts of working capital of
chosen organisation.
To make suggestions for the better
working capital management of selected
units.
The company can successfully
work on various ways in order to manage
the working capital management in
organisation. They are specifically
providing dashboards to their finance
professionals on a monthly basis. They
are then monitoring working capital as a
KPI for organisation. This helps them in
understanding weather Working capital is
actually improving or not. The inventory
system of Pfizer uses Global Market
Exchange (GMX) which effectively. All
the key decisions in organisation that
may have an effect on working capital
management is deeply considered before
being finalised
Methodology
There are two types of methodologies
which can be adopted by an organisation
in order to conduct a research. The
following is a secondary research. There
are a number of journals, newspapers,
magazines and online sites used in order
to collect the data for following research.
The financial details of company is also
taken into account which are helping to
calculate various ratio that are related to
working capital.

Mental wealth;professional exchange and applied research
(A study of impact of social media on consumer behaviour)
Conclusion Recommendations
From the above information, it has
been recommended that Pfizer is
needed to keep a regular check on
its working capital. The major raw
materials of company must be
ordered in a limit and carrying cost
that is attached to raw material is
also required to be checked on
regular interval. The ordering
quantity of company must be
valued effectively to make sure that
there are no shortage of fund. The
financial officers of company are
also provided with Dashboards
which will help them to effectively
work on the changing finances.
.
It is concluded from the above
report that working Capital
management of Pfizer is always
positive and company is effectively
maintaining its current assets and
current liabilities. It is important
for organization to manage all of
its current assets so that the
company is never short of funds to
fulfill its liabilities. Management
of working capital helps
organizations to expand and meet
all the daily obligations.
ReferencesData Analysis &
Interpretation
.
June march Dec Sept
2020 2020 2019 2019
Current Liabilities Change
2.16% 15.8% 17.09% 27.74%
Current Assets Change
-1.38% -23.3% -34.3% -19.54%
Working capital ratio
1.42 1.03 0.87 0.9
References
Flannery, M.J. and Öztekin, Ö.,
2019. Working-Capital and Capital
Structure. Available at SSRN
3479180.
Lefebvre, V., 2020. Performance,
working capital management, and
the liability of smallness: A
question of opportunity costs?.
Journal of Small Business
Management, pp.1-30.
Wright, J.S. and Doukas, D., 2020.
Challenges to sovereign ambitions:
forces of convergence and
divergence within the global
pharmaceutical sector and the UK's
withdrawal from the European
Union. Health Economics, Policy
and Law, pp.1-17.
Kratochvil, R. and Nell, P.C., 2019.
Pfizer and the Challenges of the