In January 2019, United Airlines (UAL) had a market capitalization of $22.90 billion, debt of $13.40 billion, and cash of $4.00 billion. United Airlines had revenues of $41.30 billion. Southwest Airlines (LUV) had a market capitalization of $27.50 billion, debt of $3.40 billion, cash of $3.70 billion, and revenues of $22.00 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. a. Compare the market capitalization-to-revenue ratio (also called the price-to-sales ratio) for United Airlines and Southwest Airlines. The market capitalization-to-revenue ratio for United Airlines is The market capitalization-to-revenue ratio for United Airlines is enter your response here . (Round to three decimal places.) Part 2 The market capitalization-to-revenue ratio for Southwest Airlines is enter your response here . (Round to three decimal places.) b. Compare the enterprise value-to-revenue ratio for United Airlines and Southwest Airlines. The enterprise value-to-revenue ratio for United Airlines is enter your response here . (Round to three decimal places.)
In January 2019, United Airlines (UAL) had a market capitalization of $22.90 billion, debt of $13.40 billion, and cash of $4.00 billion. United Airlines had revenues of $41.30 billion. Southwest Airlines (LUV) had a market capitalization of $27.50 billion, debt of $3.40 billion, cash of $3.70 billion, and revenues of $22.00 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. a. Compare the market capitalization-to-revenue ratio (also called the price-to-sales ratio) for United Airlines and Southwest Airlines. The market capitalization-to-revenue ratio for United Airlines is The market capitalization-to-revenue ratio for United Airlines is enter your response here . (Round to three decimal places.) Part 2 The market capitalization-to-revenue ratio for Southwest Airlines is enter your response here . (Round to three decimal places.) b. Compare the enterprise value-to-revenue ratio for United Airlines and Southwest Airlines. The enterprise value-to-revenue ratio for United Airlines is enter your response here . (Round to three decimal places.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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In January 2019, United Airlines (UAL) had a market capitalization of $22.90 billion, debt of $13.40 billion, and cash of $4.00 billion. United Airlines had revenues of $41.30 billion. Southwest Airlines (LUV) had a market capitalization of $27.50 billion, debt of $3.40 billion, cash of $3.70 billion, and revenues of $22.00 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.
a. Compare the market capitalization-to-revenue ratio (also called the price-to-sales ratio) for United Airlines and Southwest Airlines.
The market capitalization-to-revenue ratio for United Airlines is
The market capitalization-to-revenue ratio for United Airlines is
enter your response here
.
(Round to three decimal places.)
Part 2
The market capitalization-to-revenue ratio for Southwest Airlines is
enter your response here
.
(Round to three decimal places.)
b. Compare the enterprise value-to-revenue ratio for United Airlines and Southwest Airlines.
The enterprise value-to-revenue ratio for United Airlines is
enter your response here
.
(Round to three decimal places.)
Part 4
The enterprise value-to-revenue ratio for Southwest Airlines is
enter your response here
.
(Round to three decimal places.)
Part 5
c. Which of these comparisons is more meaningful? Explain. (Select all the choices that apply.)
Transcribed Image Text:In January 2019, United Airlines (UAL) had a market capitalization of $22.90 billion, debt of $13.40 billion, and cash of $4.00 billion. United Airlines had revenues of $41.30 billion.
Southwest Airlines (LUV) had a market capitalization of $27.50 billion, debt of $3.40 billion, cash of $3.70 billion, and revenues of $22.00 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.
lior
c. Which of these comparisons is more meaningful? Explain.
sale
wes
a. Compare the market capitalization-to-revenue ratio (also called the price-to-sales ratio) for United Airlines and Southwest Airlines.
The market capitalization-to-revenue ratio for United Airlines is (Round to three decimal places.)
The market capitalization-to-revenue ratio for Southwest Airlines is
(Round to three decimal places.)
b. Compare the enterprise value-to-revenue ratio for United Airlines and Southwest Airlines.
-sale
The enterprise value-to-revenue ratio for United Airlines is
(Round to three decimal places.)
The enterprise value-to-revenue ratio for Southwest Airlines is
spon
c. Which of these comparisons is more meaningful? Explain. (Select all the choices that apply.)
(Round to three decimal places.)
O A. You cannot meaningfully compare the market capitalization-to-revenue ratio when firms have different amounts of leverage, as market capitalization measures only the
value of a firm's equity.
O B. You cannot meaningfully compare the enterprise value-to-revenue ratio when firms have different amounts of leverage, as enterprise value measures only the value of a
firm's equity.
ur res
O C. The market capitalization-to-revenue ratio is more useful when the leverage of firms is quite different, as it is here.
O D. The enterprise value-to-revenue ratio is more useful when the leverage of firms is quite different, as it is here.
uthwes
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