Question: 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.
Q1. Compare the market capitalization-to-revenue ratio (also called the price-to-sales ratio) for AMR and BAB.
Q2. Compare the enterprise value-to-revenue ratio for AMR and BAB.
Q3. Compare the debt/capital ratio (d/d+e) for on-book and market.
Q4. Which of these comparisons is more meaningful? Explain.