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.