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Question 417 - CSCP discussion

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Which of the following metrics is the most appropriate measure of supply chain asset efficiency?

A.
Return on equity
Answers
A.
Return on equity
B.
Net present value (NPV)
Answers
B.
Net present value (NPV)
C.
Cash-to-cash cycle time
Answers
C.
Cash-to-cash cycle time
D.
Upside flexibility
Answers
D.
Upside flexibility
Suggested answer: C

Explanation:

Cash-to-cash cycle time is a key metric for measuring supply chain asset efficiency. It represents the time taken between outlaying cash for raw material purchases and receiving cash from product sales. A shorter cash-to-cash cycle time indicates a more efficient use of assets, as it means the company is quicker in converting its investments in inventory into cash flow. This metric directly reflects how well a company manages its inventory, payables, and receivables. Return on equity (ROE) and net present value (NPV) are broader financial metrics, while upside flexibility measures responsiveness, not efficiency.

Reference: Supply Chain Council, 'Supply Chain Operations Reference (SCOR) Model'; Christopher, M. (2016). 'Logistics & Supply Chain Management.'

asked 16/09/2024
giorgi durglishvili
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