Impact of Supply Chain Performance Upon the Firm's Financial Performance

Abstract

Study is taken on BSE 100 stocks to analyse the supply chain ratio (SC ratio). Data of past 10 years of these firms is used to calculate the supply chain ratio. It is found that the manufacturing sector has significantly higher networking capital as compared to service sector firms. It is because of firms going for expansion either by sales or additional investments. Trade receivables form the major new net working capital. This results in the negative relation of SC ratio with Return on Equity (ROE) of firms. However, the service sector has positive relation to SC ratio. That is the firms are less impacted by additional working capital, and have a focus on positive earnings only. So, the increase in cash flows goes in parallel to the Return on Equity.

Keywords: supply chain finance, Return on equity, Supply chain ratio

JEL Classification: G29