Certified Supply Chain Professional (CSCP) Practice Exam

Which of the following metrics is least likely to be related to financial performance?

1. Debt-to-equity ratio

2. Employee satisfaction index

3. Return on equity

4. Gross profit margin

The correct answer is: Employee satisfaction index

The employee satisfaction index is the least likely metric to be directly related to financial performance. While employee satisfaction can indirectly influence a company’s financial performance through factors such as productivity, retention rates, and overall workplace morale, it does not provide a direct measure of financial outcomes. In contrast, the other metrics are specifically designed to assess financial health and are typically used in financial analysis or performance measurement. The debt-to-equity ratio provides insight into a company’s capital structure and risk, indicating how much debt is used to finance operations relative to shareholders' equity. Return on equity measures how effectively a company is using its equity to generate profit, providing a clear picture of financial efficiency. Gross profit margin reveals the percentage of revenue that exceeds the cost of goods sold, which is essential for understanding profitability. Therefore, while employee satisfaction is important for maintaining a healthy work environment, it does not measure financial outcomes as directly as the other listed metrics do.