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The Relationships between Supply Chain Capability and Shareholder Value Using Financial Performance Indicators

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  • Seock-Jin Hong

    (Department of Marketing, Logistics and Operations Management, G. Brint Ryan College of Business, University of North Texas, Denton, TX 76203, USA)

  • Hossein Najmi

    (Department of Information Systems and Operations Management, College of Business, University of Central Oklahoma, Edmond, OK 73034, USA)

Abstract

The purpose of this paper is to explore which financial performance indicators (FPIs) evaluate the level of supply chain capability (SCC) that explicitly touches all of the business functions and processes within and beyond the company. The authors investigated nine FPIs that were selected from the financial statements of 155 companies within nine industries from 2011 to 2017 using Morningstar financial database and Gartner’s report. The authors find that suitable FPIs to measure SCC for shareholders’ value are return-on-assets (ROA), days-sales-outstanding (DSO), and current ratio (CR). This means that higher ROA, shortened DSO, and an appropriate level of CR could reach a sustainable supply chain. These results will help the industry to avert a major disruption in supply chain processes and activities using suitable financial performance indicators.

Suggested Citation

  • Seock-Jin Hong & Hossein Najmi, 2020. "The Relationships between Supply Chain Capability and Shareholder Value Using Financial Performance Indicators," Sustainability, MDPI, vol. 12(8), pages 1-16, April.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:8:p:3130-:d:345037
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    Cited by:

    1. Jakub Horak & Petr Suler & Jaroslav Kollmann & Jan Marecek, 2020. "Credit Absorption Capacity of Businesses in the Construction Sector of the Czech Republic—Analysis Based on the Difference in Values of EVA Entity and EVA Equity," Sustainability, MDPI, vol. 12(21), pages 1-16, October.
    2. Amit Arora & Anshu Arora & Julius Anyu & John R. McIntyre, 2021. "Global Value Chains’ Disaggregation through Supply Chain Collaboration, Market Turbulence, and Performance Outcomes," Sustainability, MDPI, vol. 13(8), pages 1-18, April.
    3. Hong, Seock-Jin & Farris, Martin Theodore & Pohlen, Terrance L. & Idug, Yavuz, 2023. "Exploring the impact of working capital in the U.S. aviation industry for profitability and shareholder value," Transport Policy, Elsevier, vol. 144(C), pages 90-101.
    4. Hong, Seock-Jin & Kim, Woongyi & Niranjan, Suman, 2023. "Challenges to the air cargo business of combination carriers: Analysis of two major Korean Airlines," Journal of Air Transport Management, Elsevier, vol. 108(C).

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