The effect of Recent Recession on the capital structures of the UK companies

By



ACKNOWLEDGEMENT

I am very grateful to God who has given me the grace to start this course and end it successfully. I would like to thank my family, who worked really hard and stood by me all the way. God bless my family who gave me full support and encouraged me. I would like to thank my supervisor, for her patience and support. Finally to my friends and all who have made the completion of this project a success, thank you and God bless you.

DECLARATION

I declare that the work in this dissertation was carried out by me. The project is my own original work and has not been submitted elsewhere in fulfilment of the requirements of this or any other award.

SIGNED: ............................................................. DATE: ..........................

ABSTRACT

The major purpose of this dissertation was to examine the effect of recent recession on the capital structures of the UK companies. There was also a need to assess the various factors related to the different financial risks experienced by the companies. A financial analysis was conducted in this study to examine the performance of corporate sector under the specific period. There were five companies known as Barclays Bank UK, British Petroleum, Royal Dutch Shell UK, British Telecom and British American Tobacco which were analysed in detail. The annual reports of these five companies were selected and the capital structures of these firms were examined in detail with the help of ratio analysis. It was seen that some of the companies experienced a much higher effect of recession in terms of their capital structure like Barclays Bank UK and British Petroleum. On the other hand, the other three companies known as British Telecom, Royal Dutch Shell UK and British American Tobacco did not experience a much higher effect of recession in terms of their capital structure. It was emphasised that a proper strategy adopted by the UK Government and other important sectors can help in countering the negative effect of recession in future. In this way, the corporate sector will still manage to perform well even during the difficult economic times. Therefore, these were the major issues related to research study that was discussed in detail.

TABLE OF CONTENTS

ACKNOWLEDGEMENT2

DECLARATION3

ABSTRACT4

CHAPTER 1: INTRODUCTION7

1.1 Background of the topic7

1.2 Statement of the Problem8

1.3 Research Questions8

1.4 Significance of the Study8

CHAPTER 2: LITERATURE REVIEW9

2.1 Background of the Financial Crisis9

2.2 Profile of an Economic Downturn11

2.3 Economic Recessions of the 20th and 21st Centuries13

2.4 The position of the debt policy in Europe14

2.5 Different aspects of Economic Recession16

2.6 Short-term strategy to tackle recession in UK18

2.7 Long-term strategy for UK recession20

2.8 The value of Capital Assets in the UK's economy20

CHAPTER 3: METHODOLOGY22

3.1 Overview of Research Methodology22

3.2 Quantitative Analysis23

3.3 Theoretical model24

3.4 Sample Size for the study24

3.5 Research Instrument25

3.6 Limitations of the Study25

3.7 Validity and Reliability25

3.8 Ethical Concerns for the Research27

CHAPTER 4: DISCUSSION AND ANALYSIS28

4.1 Discussion of the Analysis of the results28

4.2 Interpretation of the Data Analysis28

4.3 Overall Findings of the Study43

CHAPTER 5: ...