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Business Financial Analysis - Assignment Example

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Insurance industry has become one of the most fundamental sectors in the performance of any economy. Businesses, private organizations, and individuals all insure their products and property to shield them from recording significant losses and potential threats to going concern problem…
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Business Financial Analysis
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Download file to see previous pages Insurance industry has become one of the most fundamental sectors in the performance of any economy. Businesses, private organizations, and individuals all insure their products and property to shield them from recording significant losses and potential threats to going concern problem.The choice of state farm insurance has been propelled by the better ranking and the immense interests that investors have on the insurance segment of the economy. Any economic sector that fails to develop robust insurance firms and businesses are bound to record losses that arise due to the uncertain nature of operations.This paper therefore analyze the financial performance of state farm insurance, its performance in the industry, products, and leadership styles that have been pursued by the company to achieve the core objectives. State farm insurance was founded with the core object of providing insurance to the automotives of farmers before it later ventured into other services provision and increased its products range. The company recorded significant growth in the lifetime and is one of the top ranked companies according to the Fortune 500 Company ranking. Companies that operate in highly competitive industry must ensure continuous monitoring of their financial performance and satisfaction of the interests of their stakeholders for them to be going concern. It is for this purpose that potential investors and trhose who wish to engage in trade in the stock market will value the analysis. The use of financial ratios and other financial techniques will be involved in the analysis of the business. INTRODUCTION Insurance industry has become one of the most fundamental sectors in the performance of any economy. Businesses, private organizations, and individuals all insure their products and property to shield them from recording significant losses and potential threats to going concern problem. The choice of state farm insurance has been propelled by the better ranking and the immense interests that investors have on the insurance segment of the economy. Any economic sector that fails to develop robust insurance firms and businesses are bound to record losses that arise due to the uncertain nature of operations. State farm insurance growth in business and operation also makes it suitable for analysis and consideration. COMPANY BACKGROUND State farm insurance was formed in 1922 by its policyholders to insure automobiles. At the early stages, the company was entirely engaged in the insurance of auto of farmers before extending their operations to cover the insurance of banking services, financial services, and life insurance (Mundy 16). George Mecherle who was a retired farmer and was interested in improving the welfare of the members founded it. The company has recorded tremendous growth of both employees and the number of company agents. State farm insurance has expanded its operations in other countries like Canada and has operations in most of the states in America (Mundy 18). State farm insurance was heavily hit by the recession in the financial sector since many policy holders were unable to pay for their insurance. The company has since recorded growth in their base and has policyholders of about 80 million people. MANAGEMENT STRUCTURE Management is the act of planning the future now. An organization that is aimed at surviving in the dynamic and competitive market must have a strong management and visionary leadership. Rust ensured that state farm mutual insurance had a well-educated staff. He believed that through training and knowledge, the employees input, and efficiency will be increased. State farm therefore incurred large amounts of money in taking their employees for further training and education. Better leadership ensured that the future could be forecasted and that risks inherent in the business were absorbed by the business. Management of state farm also motivated their staffs by giving out better packages to their employees and investing heavily on talents (Millenson 45). Rust, the chairperson of the board has thus succeeded in the winning of the confidence and trust of their employees. FINANCIAL ANALYSIS State farm insurance recorded a decline in their revenue and earnings in the financial year 2011. This was attributed to the increased number claims. Moreover, the large portfolio of ...Download file to see next pagesRead More
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