Supply Chain Finance: Developing a Weighted Cash Conversion Cycle to Proxy Corporate Financial Performance
Authors:   , Hammady Brho Mazen 
Published: February 2025

The objective of this three-essay dissertation are to develop a weighted cash conversion cycle (CCC_EVA) and empirically investigate its commensurability of corporate financial performance. Essay 1, titled "Supply Chain Finance: Developing a Weighted Cash Conversion Cycle to Proxy Operations Liquidity", presents the development and supporting empirical evidence of CCC_EVA measurability of operations liquidity. This essay shows the processes of scaling capital intensity and financing cost into time intervals captured by the traditional metric. Specifically, this essay investigates how accurately CCC_EVA indexes operations liquidity captured working capital, operational cash flow-to-modified working capital ratio, and quick ratio. The sample used in this essay consists of 4,333 firm-year observations of publicly traded industry classified firms listed on the U.S. exchange markets. The results of the empirical testing have statistically supported the essay hypotheses, that is CCC_EVA is a more accurate proxy of operations liquidity in comparison to the traditional metric (CCC_D). Essay 2, titled "Supply Chain Finance: Weighted Cash Conversion Cycle and Corporate Finance", expands the first essay findings by accounting for well-known financial measurements. Specifically, this essay examines the relations between CCC_EVA and operations liquidity and leverage, Market value, operating profitably and growth, and long-term asset management efficiency. This essay paper has used a sample of 24,127 firm-year observations of publicly traded firms listed on U.S. exchange markets from 1994 to 2016. The results support and extend the previous findings, that is CCC_EVA is a robust proxy of operations liquidity and can enhance its resiliency; maximize market value of corporate equity and debt; identify strategies to improve corporate profitability and credibility. Essay 3, titled "Supply Chain Finance: An Advanced Weighted Cash Conversion Cycle", advances the accuracy of CCC_EVA by differentiating between cash and credit forms of corporate sales and purchase transactions, and introducing operational cash flow into CCC_EVA. The advanced metric allows differences in inventory carrying cost and capital costs to be sources of the economic value added (EVA). Within a longitudinal case-based approach, the results show that the advanced metric is a potential decision tool to leverage on supply chain diversity and capitalize on its relation dynamics. Specifically, the implantation of the advanced metric can minimize the overall SC weighted average cost of capital (WACC) and its inventory carry cost (ICC); boost EVA of SC activities; and hedge liquidity risk. This three-essay dissertation has addressed the academic skepticism about CCC_D‘s commensurability by developing an advanced weighted metric (CCC_EVA) that accounts for capital intensity and financing cost. The three essays provide evidence of CCC_EVA testability and its adequacy of presenting corporate financial performance. The findings of this dissertation contribute to both industry and academia. Industry practitioners can implement CCC_EVA as a strategic decision instrument to balance SC liquidity distribution and resilience; hedge default risk of hidden deep-tier SC partners; increase overall SC profitability and creditability; boost equity value; and reveal existing opportunities of SC's EVA sources. Academically, these three essays initiate a fundamental and much-needed step for scholars to advance a systematically published metric, which can contribute to the implications, innovations, and knowledge of the SCF domain.