Leveraging financial management performance of the Spanish aerospace manufacturing value chain

Abstract

We study financial management performance during 2008–2013 for the Spanish aerospace manufacturing value chain and the links with managerial decisions. Data from company financial statements is analysed with Principal Component Analysis, Data Envelopment Analysis and an Artificial Neural Network. Top financial performers focus on liquidity management rather than on returns: both in the short term, by increasing levels of current assets and funding them with short-term liabilities, as well as increasing asset turnover; and in the long term, by aligning equity to non-current assets, while reducing asset and debt intensity levels. Only the manufacturing value chain is analysed, showing the potential for future research in related fields (e.g. value chain, country). Benchmarking and forecasting financial performance yields information and enables agility and accuracy in the strategy setting process. This study makes a unique contribution because it applies the scientific method where no previous related studies have done. It offers the novelty of using a single metric while Ratio Analysis requires multiple unweighted measures. We contribute by: (a) providing a method based on publicly information to benchmark and predict financial performance, thus offering benefits for aerospace stakeholders and academia; and (b) employing a big data sample that closely represents the population.

Keywords:

• market performance
• market structure
• aerospace
• factor analysis
• neural networks
• data envelopment
• financial management

JEL Classification:

• L1
• L620
• C380
• C450
• D240

Additional information

Notes on contributors

Rubén Elvira Herranz

Rubén Elvira HERRANZ is an Adjunct Professor of Mathematics at Instituto de Estudios Bursátiles (Madrid, Spain), and previously Adjunct Professor of Project Management and Economics in Aerospace Engineering School at Universidad Politécnica de Madrid (Madrid, Spain). Also employed by Airbus since more than 10 years, the last ones as Program Manager. He holds a PhD degree in Business Administration from Rey Juan Carlos University (Madrid, Spain), as well as two MS and MBA, plus a Bachelor in Aerospace Engineering. Certified as PMP ® (Project Management Professional). His research interests are in the areas of operation management, finance and economics. He has attended and participated in various international congresses, holding some publications in journals.

Pablo García Estévez

Pablo García ESTÉVEZ is an Associate Professor of Finance at CUNEF and IE Business School (Madrid, Spain). Also is a senior financial advisor to companies. He holds a PhD degree in Economy from Complutense University (Madrid, Spain) and MS in Financial Firms Management. He has published nine books regarding M&A, Stock Markets and Financial Management as well as various articles. His research line targets the application of Artificial Neural Networks to financial markets.

María Auxiliadora de Vicente y Oliva

María Auxiliadora de Vicente y OLIVA is an Associate Professor of Statistics at Rey Juan Carlos University (Madrid, Spain). She holds a PhD and BA in Mathematics from Complutense University (Madrid, Spain). She performs various research projects with the Spanish Public Administration either as lead researcher or adjunct researcher. Counting with several publications in journals and participation on various conferences, both national and international. Her research lines targets the application of multicriteria decision analysis to economic and financial topics.

Rahul Dé

Rahul DÉ is the Hewlett-Packard Chair Professor in ICT for Sustainable Economic Development, in the Decision Sciences and Information Systems Area at the Indian Institute of Management Bangalore. He holds a PhD from the University of Pittsburgh, Katz Graduate School of Business. Since 1990, he has taught Information Systems courses at various universities in the United States, India, Spain, France, Sweden and Norway. His research interests are in ICT for development, open source and e-Government systems. He has published two books and over 60 articles in international journals, as chapters in books and in refereed conference proceedings. He has served on the Board of IIM Bangalore, and continues to serve on the Boards of Institute for Development and Research in Banking Technology, Hyderabad, and sflc.in (Software Freedom Law Centre in India). He serves on the editorial board of the journals Information & Management and Government Information Quarterly. He received the Outstanding Paper Award at the Eight International Conference on Electronic Government, EGOV 2009, at Linz, Austria. He was awarded the Rene Wagenaar Outstanding Paper Award at the Sixth International Conference on Electronic Government, EGOV 2007, in Regensburg, Germany. In July 2010, he received the Best Professor in Information Systems Award at Asia's Best B-School Awards in Singapore.