market cap/enterprise val
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In July 2005, American Airlines (AMR) had a market capitalization of $2.3 billion, debt of $14.3 billion, and cash of $3.1 billion. American Airlines had revenues of $18.9 billion. British Airways (BAB) had a market capitalization of $5.2 billion, debt of $8.0 billion, cash of $2.9 billion, and revenues of $13.6 billion.
a. Compare the market capitalization-to-revenue ratio (also called the price-to-sales ratio) for AMR and BAB.
b. Compare the enterprise value-to-revenue ratio for AMR and BAB.
c. Compare the debt/capital ratio (d/d+e) for on-book and market.
d. Which of these comparisons is more meaningful? Explain.
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Answer:
Given that,
For American Airlines (AMR),
Market Capitalization=$2.3 billion
Debt=$14.3 billion
Cash=$3.1 billion
Revenue=$18.9 billion
For British Airways (BAB),
Market Capitalization=$5.2 ...
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- MBA, Indian Institute of Finance
- Bsc, Madras University
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