Coursework Assignment 2 Answer Template

This document provides an answer template for coursework assignment 2. It includes important rules and guidelines for coursework submission, top tips for answering assignments, and an analysis of the financial and general metrics of Marsh Company. The financial metrics analyzed include return on equity ratio and current liquidity ratio, while the general metrics analyzed include customer loyalty and employee satisfaction.

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To be completed before submission:
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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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questions anonymously, without letting their names comes out. This helps marsh to know
the satisfaction level of their employees.
Analysis of Financial Metrics of Marsh
Marsh Company’s financial metrics are of various types however, for the current study two
significant financial metrics are taken into consideration. One of them is return on equity ratio
and other is current liquidity ratio. For analyzing ratios are taken into consideration. It is done
so, with a view of measuring the company’s performance and comparing it with competitive
companies. For this purpose the two ratios that explained above is going to be analyzed in
this section.
Return on Net worth/ Equity (ROE) Ratio
Return on equity is the ratio that talks about the net return that is received by the company in
a financial year8. It is identified in percentage form by using net profit after tax of the
company and average networth or equity of the company9. For this purpose the balance
sheet and other financial statements of the Marsh and McLennan company is used, as
Marsh is the subsidiary of MMC and its financial statements are not available separately.
The formula for identifying ROE ration is:
Net Income or Profit after Tax
ROE= --------------------------------------- * 100
Shareholder’s Equity or Average
Net worth
By applying valid numbers that are in measured in million, in the formula the following result
is obtained:
$ 1670
ROE= ------------------- * 100 = 20.02 %
8Bong Soo,Leeand others, ‘Dynamics of market volatility, Market return, and equity fund flow:
international evidence’ [2015] 35 IREF 214
9Sudhir,Gupta, Financial Management (Centrum Press, 2011)
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$ 7584
In this ratio, the return on networth or equity is calculated as 20.02 %. This means that the
company is using its shareholder’s equity in an effect and effective way. The ratio is not low
and is a good one. ROE is considered good when it comes between 15 to 20 % and in this
case, the ratio value come as 20 %, which can be considered good. That means company is
using its equity efficiently and giving competitors a tough competition10.
Current Liquidity Ratio (CLR)
Current Liquidity Ratio is the ratio that talks about liquidity position of the company. It is
identified by using current assets and current liabilities of the company of financial year
201811. This information is taken from the 2018 annual report of Marsh and McLennan
Company. It is so because the details about Marsh Company are not given separately.
The formula for identifying Current Liquidity Ratio is:
Current Assets
CLR = ----------------------------------
Current Liabilities
By applying valid numbers that are in measured in million, in the formula the following result
is obtained:
$ 5934
CLR = ------------------ = $ 1.205 million
$ 4924
In this ratio, the current liquidity of the company comes as$ 1.205 million. It is not that low
and to some extent is a desirable value, as it is usually considered that current ratio that is
from 1.5 to 2.0 will be suggesting efficient results. However, in this case the CLR of the
company comes 1.2 that needs to be increased12.
10FM, Epetimehin, and OA, Ekundayo, ‘The Impact of Risk Pricing on Profit Maximization of Insurance
Companies’ [2012] 1 IJAREMS 21
11Larry, Swedroe, Kevin, Grogan, and Tiya, Lim, The only Guide you’ll ever need For the Right
Financial Plan: Managing Your Wealth, Risk and Investments (John Wiley & Sons, 2010)
12Hai, Lin, Junbo, Wang and Chunchi, Wu, ‘Liquidity risk and expected corporate bond returns’ [2011]
99 JFE 628
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Analysis of General Metrics of Marsh
General metrics are one of the metric of business. For analyzing general metrics of Marsh
Company, two measuring elements are taken into consideration, which are Customer
Loyalty and Employee Satisfaction. These elements are not belongs to general performance
measuring standards of the Marsh company.
Customer loyalty
It is loyalty from the side of customers towards the company. In this case, it is talking about
the Marsh clients’ loyalty towards it. Marsh influences their clients to buy in higher quantities
and in turn intentionally bring more clients for the company. In Marsh or other insurance
broking firms, the loyalty from their customers or clients is the major element that is
considered for measuring company’s position in the market. Marsh’s Customer loyalty can
be measured by analyzing following elements.
Customer Retention: It means the willingness of the customer to stay with the company by
purchasing goods and services from the company. Clients of Marsh are from various
industries. It is serving them from a large number of time. They have provided them equity
basis also.
Customer Advocacy: Simply means the support from the public for the recommendations
of a particular issue or a situation. Marsh gets a right amount of public advocacy or support
directly and indirectly. In times of economic crisis, Marsh still manages to stay right in. it is all
possible because of a strong base of its customers and their advocacy13.
Repurchasing by customers: It means purchase and then repurchase made by same
customer by getting satisfied from the company’s response. Marsh as already told has a
strong base of its customers. The company is serving from almost 140 years and still
manages to stay in one of the top companies. This all is possible because of the purchase
and repurchases made by its clients.
Employee Satisfaction
It is always said that a company is profitable and competitive in nature when its employees
are satisfied enough and are working without negative stress. The Marsh has a very large
amount of workforce. Their main aim is to manage the risk portfolios of their clients and
provide optimum solutions for it14. The employees of Marsh are involved in fulfilling the main
objective of the company, so it is company’s responsibility to take care of its employees for
the betterment of company and its employees15. The satisfaction level of Marsh employees
can be analyzed by reviewing following elements:
13Marsh, ‘Who We Are’ (Marsh, 2019d) https://www.marsh.com/uk/about-marsh/who-we-are.html
accessed 23rd April 2019
14Albrecht, Simon L. ‘Influence of job, team and organizational level resources on employee well-
being, engagement, commitment and extra-role performance: Test of a model’ [2012] 33 IJM 840
15Marsh & McLennan, ‘Company’s Annual Report’ (MMC, 2018a)
file:///C:/Users/SystemJP/Downloads/MEDIA%20VERSION%204Q18%20Ex%2099.1%20News
%20Release%20r129.pdf accessed 23rd April 2019
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 Employee Suggestion box: Marsh Company uses suggestion boxes in their units in
order to get to know about the thinking and feelingof their employees. These thinking
and feelings mainly related to internal and external environment of the company.
Marsh allows employees to drop their suggestions, problems, etc in that suggestion
box and after that company take care of those things. There is no need for
employees to disclose their names.
 Employee performance review: in order to check the employee satisfaction level
the performance review of the employees can also be treated as one of the best
elements. In Marsh organization, the performance of the employees is analyzed by
doing performance appraisal on fixed intervals.
 Anonymous employee surveys: it is the type of survey, which is conducted by the
company without disclosing the real identity of respondents. In Marsh organization,
also the anonymous surveys are conducted in order to know the perceptions of their
employees and take actions according to it.
Recommendations for improving Marsh Performance Level
Marsh is a very big organization and serves in almost 130 countries and a global leader of
managing risk, strategy and people. In this assignment, financial and general metrics of
Marsh Company are discussed and analyzed. The financial ratios are return on equity and
other is current liquidity ratio. On the other hand, general metrics are customer loyalty and
employees satisfaction. These both help an organization to measure its position in the
market. By analyzing all metrics, some recommendations can be made for betterment of
Marsh organization16. These recommendations are as follows:
 In Financial metrics, first ratio is about equity of the company and it comes around
20%, which is a good value. Still company has to maintain this value. In order to do
so, it should manage properly company’s assets in order to make profits.
 Another ratio in financial metric is current liquidity ratio. Its value is $1.205 million,
which implies that it is not that good value. Good value is between 1.5 to
2.0;however, in this the value is 1.2. This means that company is having problem
with its liquidity and need to improve it17.
 In general, metrics, customer loyalty and employee satisfaction both the elements
talk about the pace of growth and development of the company. In order to be a
competitive and profitable entity in the market the company needs to work harder for
the satisfaction of its employees and customers18.
 For customer loyalty, it can focus more on reaching to customers more through social
media also. It can reward it customers in order to attract them. For satisfaction of its
employees, it can provide them fixed yoga sessions to reduce their stress level, it can
16Sven, Overhage, Dominik, Birkmeier, and Sebastian, Schlauderer, ‘Quality Marks, Metrics, and
Measurement Procedures for Business Process Models’ [2012] 4 BISE 229
17Marsh & McLennan, ‘Investors’ (Marsh, 2018b) http://news-investors.mmc.com/phoenix.zhtml?
c=113872&p=irol-investors#quarterly_earnings accessed 23rd April 2019
18Marsh, ‘Leading the Way in Transparency’ (Marsh, 2019c)
https://www.marsh.com/uk/about-marsh/leading-the-way-in-transparency.html accessed 23rd April
2019
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also work on their incentive policies to motivate employees to work effectively and
hence they get satisfaction from it19.
19Marsh, ‘Leadership’ (Marsh, 2019b) https://www.marsh.com/uk/about-marsh/leadership.html
accessed 23rd April 2019
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Referencing must be completed before submission
All sources must be referenced in the body of your answer as well as in your reference list. See
the 930Specimen coursework assignment and answer for examples of how to reference
correctly in text and in your reference list.
References
Bibliography
Secondary Sources
Books
Chandra, Prasanna, Fundamentals of Financial Management ( McGraw Hill, 2014)
Gupta, JB, Taxmann’s Strategic Financial Management (9th edition, Taxmann, 2016)
Gupta, Sudhir, Financial Management (Centrum Press, 2011)
Swedroe, Larry, Grogan, Kevin and Lim, Tiya, The only Guide you’ll ever need For the Right
Financial Plan: Managing Your Wealth, Risk and Investments (John Wiley & Sons, 2010)
Articles
Debra, Zahay and Abbie, Griffin, ‘Marketing Strategy selection, marketing metrics and firm
performance’ [2010] 25 JBIM 84
Epetimehin, FM and Ekundayo, OA, ‘The Impact of Risk Pricing on Profit Maximization of
Insurance Companies’ [2012] 1 IJAREMS 21
Lee, Bong Soo and others, ‘Dynamics of market volatility, Market return, and equity fund flow:
international evidence’ [2015] 35 IREF 214
Lin, Hai, Wang Junbo and Wu, Chunchi, ‘Liquidity risk and expected corporate bond returns’
[2011] 99 JFE 628
Overhage, Sven, Birkmeier, Dominik and Schlauderer, Sebastian, ‘ Quality Marks, Metrics, and
Measurement Procedures for Business Process Models’ [2012] 4 BISE 229
Simon L. Albrecht, ‘Influence of job, team and organizational level resources on employee well-
being, engagement, commitment and extra-role performance: Test of a model’ [2012] 33 IJM
840
Tarasi, Crina O and others, ‘Balancing Risk and Return in a Customer Portfolio’ [2018] 75
Journal of Marketing 1
Yusuf, Tajudeen, ‘Brokers’ incentives and conflicts of interest in the control of opportunism’
[2011] 12 TJRF 168
Websites
Marsh & McLennan, ‘Company’s Annual Report’ (MMC, 2018a)
file:///C:/Users/SystemJP/Downloads/MEDIA%20VERSION%204Q18%20Ex
%2099.1%20News%20Release%20r129.pdf accessed 23rd April 2019
10
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Marsh & McLennan, ‘Investors’ (Marsh, 2018b) http://news-investors.mmc.com/phoenix.zhtml?
c=113872&p=irol-investors#quarterly_earnings accessed 23rd April 2019
Marsh, ‘Diversity and Inclusion’ (Marsh, 2019a)
https://www.marsh.com/uk/about-marsh/diversity-and-inclusion-marsh.html accessed 23rd April
2019
Marsh, ‘Leadership’ (Marsh, 2019b) https://www.marsh.com/uk/about-marsh/leadership.html
accessed 23rd April 2019
Marsh, ‘Leading the Way in Transparency’ (Marsh, 2019c) https://www.marsh.com/uk/about-
marsh/leading-the-way-in-transparency.html accessed 23rd April 2019
Marsh, ‘Who We Are’ (Marsh, 2019d) https://www.marsh.com/uk/about-marsh/who-we-are.html
accessed 23rd April 2019
Marsh, ‘You’re changing. We are too.’ (Marsh, 2019e) https://www.marsh.com/us/home.html
accessed 23rd April 2019
Zwilling, Martin, ‘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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Glossary of key words
Analyse
Find the relevant facts and examine these in depth. Examine the relationship between
various facts and make conclusions or recommendations.
Construct
To build or make something; construct a table.
Describe
Give an account in words (someone or something) including all relevant characteristics,
qualities or events.
Devise
To plan or create a method, procedure or system.
Discuss
To consider something in detail; examining the different ideas and opinions about
something, for example to weigh up alternative views.
Explain
To make something clear and easy to understand with reasoning and/or justification.
Identify
Recognise and name.
Justify
Support an argument or conclusion. Prove or show grounds for a decision.
Outline
Give a general description briefly showing the essential features.
Recommend with reasons
Provide reasons in favour.
State
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Express main points in brief, clear form.
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