University:
MacEwan University
Course:
SCMT 200 | Introduction To Global Supply Chain Management
Academic year:

2023
Views:

340

Pages:

2
Author:

Arthur M.

Chapter 3: Supply chain drivers & metrics Supply chain surplus → goal Key financial measures of firms performance LOGISTICAL DRIVERS facility inventory transportation CROSS-FUNCTIONAL DRIVERS information, sourcing, & pricing metrics RETURN ON EQUITY (ROE): main summary measure of firm's performance (shareholder's view) HIGH ROE = Net income / Average Shareholder equity = total asset - total liability RETURN ON ASSETS (ROA): return earned on each dollar invested by firm's assets, captures return generated from operating/investing activities ROA = Earnings before interest / Average Total Assets = (Net income + income expense x (1 - Tax Rate)) / Average Total Assets RETURN ON FINANCIAL LEVERAGE (ROFL): amount of ROE that can be attributed to financial leverage (accts. payable, debt) ROFL = ROE - ROA ACCOUNTS PAYABLE TURNOVER: ratio that defines financial leverage APT = Cost of goods sold / accounts payable LOW PROFIT MARGIN: Earnings before interest / Total Revenue HIGH ASSET TURNOVER Total Revenue / total assets HIGH total asset / total liability earnings by interest Here is the text extracted from the image: ROA written as product of 2 ratios: profit margin & asset turnover ROA = Earnings before interest / Sales revenue * Sales revenue / Total assets = Profit margin x asset turnover COMPONENTS OF ASSET TURNOVER: → ACCOUNTS RECEIVABLE TURNOVER (ART) ART = Sales revenue / Accounts receivable HIGH → INVENTORY TURNOVER INUT = Cost of goods sold / Inventory HIGH → PROPERTY, PLANT & EQUIPMENT TURNOVER PPET = Sales revenue / PP&E HIGH CASH-TO-CASH CYCLE (C2C): measures average amount of time when cash enters process as cost to when it returns as collected revenue LOW C2C = -weeks payable (1/APT) + weeks in inventory (1/INUT) + weeks receivable (1/ART) MARKDOWNS: represent discounts required to convince customers to buy excess inventory LOST SALES: Customer sales that did not materialize because of absence of product they wanted want to ↑ revenue ↓ inventory ↓ operating costs