A Time Series Analysis of Profitability, Cost Structure and Market Valuation of Selected Pharma Company Using ARIMA Model

The study examines the inter-relationship between cost, profitability and market valuation with the help of the ARIMA time series model. The study aims to understand the relationship between the cost components and profitability and between profitability and market valuation of a firm. The research seeks to understand the cost, profitability and its effect on the market valuation. The secondary data is obtained from the financial reports from the public domain for the period (2016-2025). Return on Equity (ROE), Return on Assets (ROA) and Net Profit Margin (NPM) are the measures of profitability. The share performance measurements chosen are share price, Earnings Per Share (EPS) and Price-Earnings (P/E) ratio. Trend analysis, correlation analysis and ARIMA modelling are used to detect trends and inter-relationships. The findings reveal that the total salaries and wages, finance costs and depreciation negatively affect profitability, whereas some operating expenses positively affect revenue. Further, profitability has a significant positive impact on market valuation, indicating that profitability boosts investor confidence. The findings indicate that cost efficiency leads to better profitability and hence a better market valuation. Profitability is a link between financial efficiency and market valuation.