In mid-2012, United Airlines (UAL) had a market capitalization of $6

Finance Mar 04, 2021

In mid-2012, United Airlines (UAL) had a market capitalization of $6.8 billion, debt of $12.4 billion, and cash of $7.3 billion. United also had annual revenues of $37.4 billion. Southwest Airlines (LUV) had a market capitalization of $6.6 billion, debt of $3.3 billion, cash of $3.3 billion, and annual revenues of $17.0 billion.

a. Compare the market capitalization-to-revenue ratio (also called the price-to-sales ratio) for United Airlines and Southwest Airlines.

b. Compare the enterprise value-to-revenue ratio for United Airlines and Southwest Airlines.

c. Which of these comparisons is more meaningful? Explain.

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