Coursework Assignment 2 Answer Template

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Word count: 2768 Words
Start typing your answer here:
Marsh: Brief Overview
Marsh is an insurance broking firm, which was founded around 140 years back. Two friends
Henry W. Marsh and Donald R. McLennan incorporated it, in order to help the business in
coping up with industrial revolution. In insurance broking and risk management, Marsh
Company is considered a global leader1.
1Marsh, ‘Diversity and Inclusion’ (Marsh, 2019a) https://www.marsh.com/uk/about-marsh/diversity-
and-inclusion-marsh.html accessed 23rd April 2019
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Marsh has a very large network. It has its branches spread all over the world and considered
among top insurance broking companies. It has a workforce of almost 35000 employees,
which have a single motive to solve the queries of their client and risk management for them.
They manage the risk of their clients by providing them a combination of best portfolios for
their business. This allows the clients to be competitive and profitable in the market.
The insurance broking firm Marsh, is a global leader and has its branches spread out in
almost 130 countries. It is a big organization with complex network. In order to manage it,
the companies need to take care of its functions and activities effectively2. With this, point of
view in this assignment financial and general metrics of the company is analyzed and
recommendations are made according to the assessment3.
About Financial Metrics
In a financial statement, the way of measuring the key numbers of the business is known
financial metric of that business. The key numbers of the business can be measured in
variable ways some of them are by using balance sheet, return statements, ratios, etc4. By
using three key financial metrics that are balance sheet, cash flow statement and income
statement, the financial position of the company can be analyzed and predicted easily.
Marsh is a subsidiary organization of MMC hence; Marsh’s separate financial metrics are not
available. In order to analyze and predict the financial position of Marsh Company the
financial metrics of MMC is going to be analyzed in this project.
Return on Net worth/ Equity (ROE) Ratio
This ratio is used by insurance broking organizations as well as by Marsh to measure its
profitability. By using the invested money by the equity shareholders of the company, it finds
out about the profit of the company. That is why is also known as return on equity (ROE)5.
With the help of this ratio, the profitability of the company can be comparable with its
competitors.
Return on Networth/Equity (ROE) ratio is expressed as:
Net Income or Profit after Tax
ROE= --------------------------------------- * 100
2
3Marsh, ‘You’re changing. We are too.’ (Marsh, 2019e) https://www.marsh.com/us/home.html
accessed 23rd April 2019
4Prasanna, Chandra, Fundamentals of Financial Management (McGraw Hill, 2014)
5JB, Gupta, Taxmann’s Strategic Financial Management (9th edition, Taxmann, 2016)
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Shareholder’s Equity or Average
Net worth
For the calculation of this ratio, the networth of the company of financial year 2018 is taken,
which is also the profit after deducting tax. On the other hand, total equity invested by
shareholders is taken as shareholder’s equity or average networth. In next section, the
calculation of this ratio in terms of Marsh Company is discussed.
Current Liquidity Ratio (CLR)
This ratio helps companies to measure their ability to pay short-term dues or obligation.
Short-term obligations are the obligations, which are due within a year. CLR is the ratio that
tells company’s investors and customers about the ability of the company to maximize its
current assets in order to satisfy the current liabilities.
Current Liquidity Ratio (CLR) is expressed as:
Current Assets
CLR = ----------------------------------
Current Liabilities
For the calculation of this ratio, total current assets of the company of financial year 2018
have taken. On the other hand, total current liabilities have taken from the balance sheet of
the company. In next section, the calculation of this ratio in terms of Marsh Company is
discussed in detail.
About General Metrics
General Metrics are not calculated on financial basis. In fact, they are calculated on the
basis of order and ranking6. It is just the ordinal measurement of the elements of company,
which tells about the growth and profitability of the company7. With this view, for analyzing
the performance of Marsh Company in context of general metrics two significant general
metrics that are Customer Loyalty and Employee Satisfaction are taken into consideration.
Customer loyalty
As the name suggests, loyalty from the side of customers is known as customer loyalty. It is
all about attracting the appropriate customers for your business and motivates them to buy
often. In order to major customer loyalty Marsh Company uses three methods that are
explained below:
6Zahay, Debra and Griffin, Abbie, ‘Marketing Strategy selection, marketing metrics and firm
performance’ [2010] 25 JBIM 84
7Martin,Zwilling, ‘10 Metrics Every Growing Business Must Keep an Eye On’ (Forbes, 2011)
https://www.forbes.com/sites/martinzwilling/2011/09/28/10-metrics-every-growing-business-must-
keep-an-eye-on/#502b68fa61b9 accessed 24th April 2019
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 Customer Retention
In order to measure customer loyalty, the retention of the customer in company can be
treated as one of the major elements of measurement. This measure is used by marsh in
order to check its customer loyalty.
 Customer Advocacy
Customer advocacy means support from the clients of the company for a particular issue,
situation related to major changes or happenings in the company. Marsh uses customer
advocacy as one of the measures of evaluating the performance and place of the company
in market.
 Repurchasing by Customers
For measuring the customer loyalty, this factor is also considered as one of the best
methods. In this, the elements of purchasing and repurchasing done by the same customers
have recorded then analyzed. This has also done by Marsh Company to check the customer
loyalty.
Employee Satisfaction
Earlier measure talked about customer loyalty now in this measure the satisfaction of the
employees of organization is going to be explained as an instrument of measuring the
performance of the organization in the market. It is considered by marsh as one of the
element of measuring the status of the company in market, as it is said that employees that
are satisfied work more efficiently and leads to profitability of the company. Marsh uses
following factors to monitor and analyze the employee satisfaction level of its company.
 Employee suggestion box
It is not easy to know about the thinking of the employees. In order to know all this, an
employee suggestion box technique can be implemented. In which employees with a
suggestion, complain or query can drop a note in the box even without mentioning their
name in it. It is very helpful for marsh in getting to know their employees and satisfy them.
 Employee performance review
In order to determine the satisfaction level of the employees, their performance review can
be taken as one of the solid measure. In this first, the performance of the employees is
measured and evaluated and according to that, decisions are taken. Among those decisions,
one is about the satisfaction level of employees. This helps Marsh in getting to know the
performance and satisfaction level of their employees.
 Anonymous employee surveys
This is the direct method of getting to know about the satisfaction level of the employees. In
this some survey, questions are prepared and employees are asked to answer those
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