George A. Haloulakos, CFA, is a university instructor, author and entrepreneur [DBA Spartan Research and Consulting]. His published works utilize aviation as a teaching tool for Finance, Game Theory, History and Strategy.
This year marks the 75th Anniversary of the Boeing B-29 Super-fortress as its maiden flight occurred September 21, 1942. In a continuing series, this article is yet another financial reappraisal of historic or iconic aircraft. As the single most expensive weapons system undertaken by the United States of America during World War II, it warrants our attention in both financial and strategic terms. The goal of this article is to share new insights from a Finance perspective. Among the insights to be presented: (1) Profitability Analysis, (2) Added-Value from Delivery/Distribution Systems and (3) Return on Investment (ROI).
This research article is organized as follows: First, we present observations based upon research and analysis of open source references. Second is an explanation on our analytical approach that is a fusion of Finance, Strategy and Aviation. Third is a financial analysis that includes lessons learned.
Finally our closing thoughts address the legacy of the B-29.
- Victory – the ultimate metric by which a military asset is measured – is synonymous with the Boeing B-29 Superfortress. In its commemorative May 2015 edition featuring spotter cards of World War II aircraft as inserts, Air & Space magazine described the B-29 as “The bomber that ended the war; the only one ever to drop atomic bombs in combat.”
- As a technology driver, the B-29 generated spin-off benefits outside of combat that we continue to benefit from this present day! Its game-changing role in the aviation/aerospace industry makes the Superfortress a truly historic capital asset that goes well beyond nostalgia.
- The B-29 was solidly profitable. Its financial gains demonstrate an efficient, well-run capital project that provided a most satisfactory use of public funds fulfilling both military and civilian purposes.
Finance, Strategy and Aviation: Evaluating Historic Capital Projects
By Dr. John Psarouthakis, Executive Editor of www.BusinessThinker.com, Founder and former CEO, JP Industries, Inc., a Fortune 500 industrial corporation
This is the 8th of a Series of 15 short articles on “HOW TO BUY THE RIGHT COMPANY” They will be posted at one a week
The first “filters” for your leads are the initial criteria that you set in your acquisition plan. Although you will have many more issues to review as information unfolds, it is unpractical to consider much more than the total sales revenues, degree of profitability, and industry, at the start, because this is all the information you are likely to get from most brokers or other sources before having to sign a confidentiality agreement.
Once you sign a confidentiality agreement, you are wise to set up more detailed criteria. Some of the more common criteria used at this next stage include the location, product line, the reputation of the company, if easily determined, growth patterns for the industry and the company up for sale, more detail about profitability, cash flow and liquidity, and of course, the overall appeal of the business to you, personally.
Dr. John Psarouthakis is a Distinguished Visiting Fellow-Professor, Institute of Advanced Studies in the Humanities, University of Edinburgh, Scotland. Founder and former CEO, JPIndusries,Inc., a Fortune 500 industrial corporation. He is the Executive Editor of www.BusinessThinker.com
Most employees, the media, and even entrepreneurs measure success by sales and sales growth. Most “lists” like INC 500 and FORTUNE 500 rank companies this way. In earlier articles we discussed pitfalls of this approach. But if banners and plaques are not a good measure of success, what is? Seasoned business owners realize that profits and asset growth provide better assurance of a firm’s long term survival and ability to thrive. Liquidity, or the availability of cash, is also a hallmark of the well-run business.1
ASSESSING YOUR FINANCIAL VIABILITY
What does financial viability mean? How well does your company stack up? By taking a few minutes to answer the following questions, you get a quick feel for this issue.
I. Liquidity and cash flow:
Question 1. Liquidity. How would you describe your current cash position (cash in the bank, whether obtained by a bank loan, retained earnings, or from start-up capital):
 Significant liquidity, available for major investment–e.g., a new plant, building, large piece of equipment
 Some liquidity, available for minor investment–a new truck, smaller piece of equipment, office equipment
 Little liquidity, available only for high priority items to keep current operations going
 Very little liquidity– difficult to cover even essential items to keep current operations going
The median firm in our study reported “some” liquidity ( above). Yet 45 percent report having “significant” liquidity.
Question 2. Has your level of liquidity hampered business operations any time during your firm’s growth? If yes, in what way?
Question 3. Was there any particular reason that your cash position has been unusually good or poor in the past few years–purchase of a building or a large drop in sales or profitability for instance?
Question 4. Subjective rating of profits. What has your profit picture been like for each of the past five years? Rate your firm for each year separately: