Consider the following data for the airline industry for April 2019 (EV = enterprise value, Book =
Question:
Consider the following data for the airline industry for April 2019 (EV = enterprise value, Book = equity book value). Discuss the potential challenges of using multiples to value an airline.
Transcribed Image Text:
Company Name Delta Air Lines (DAL) American Airlines (AAL) United Continental (UAL) Southwest Airlines (LUV) Alaska Air (ALK) JetBlue Airways (JBLU) Market Capitalization 39,057 15,295 22,648 29,431 7,236 5,008 SkyWest (SKYW) Hawaiian (HA) Source: Morningstar and Yahoo Finance, April 2019. 3,000 1,366 Enterprise Value (EV) 47,060 33,745 32,143 29,119 8,103 5,791 5,471 1,575 EV/Sales 1.1x 0.8x 0.8x 1.3x 1.0x 0.8x 1.7x 0.6x EV/EBITDA 6.0x 6.3x 5.8x 6.5x 7.7x 7.3x 6.7x 3.4x EV/EBIT P/E 10.2x 11.2x 11.0x 12.4x 16.6x 27.7x 11.0x 6.1x 8.6x 10.5x 9.7x 8.9x 12.3x 19.2x 11.3x 4.8x P/Book 2.9x 1.3x 2.3x 3.0x 1.9x 1.1x 1.5x 1.4x
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 57% (7 reviews)
All the multiples show a great deal of variation across firms This makes the use of multi...View the full answer
Answered By
Branice Buyengo Ajevi
I have been teaching for the last 5 years which has strengthened my interaction with students of different level.
4.30+
1+ Reviews
10+ Question Solved
Related Book For
Fundamentals Of Corporate Finance
ISBN: 9780135811603
5th Edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford
Question Posted:
Students also viewed these Business questions
-
If the partial sums sn of are bounded, show that the series converges to an
-
Consider the following data for the airline industry for December 2015 (EV = enterprise value, Book = tangible book value). Discuss the challenges of using multiples to value an airline. Com pany Na...
-
Consider the following data for New York Bankcorp: Net income was $2.8 million for 20X2. The preferred stock is 10%, cumulative. The par value of the preferred stock is also its liquidation value....
-
I need help with the 10-column worksheet. When I do the balance sheet the difference of my balance numbers do not equal my net income when it should. My net income is correct since the books states...
-
a. In the Illinois Little Lotto game, you win the jackpot by selecting five different whole numbers from 1 through 39 and getting the same five numbers (in any order) that are later drawn. What is...
-
18. On August 20, Walter Manufacturing Ltd agrees to exchange its accounts payable for a 90-day, 12%, $8,000 note from Fidalgo Company. What is the journal entry made by Fidalgo Company to record the...
-
A HEN is to be designed to meet MER targets for the following stream data: (a) Compute MER targets for this process at \(\Delta T_{\text {min }}=10^{\circ} \mathrm{C}\). (b) Design a HEN to meet the...
-
The following information comes from the records of Tellys Supply: Beginning inventory.......$32,000 Inventory purchases.......85,000 Transportation-in..........4,300 An inventory count taken at...
-
4. Evaluate the following limits, if they exist. If a limit does not exist, state DNE. For these limits, recall that lim tan x a. lim X-0 x sin x COS X-1 = 1 and lim = 0. X-0 x X40X b. lim sin(x-1)...
-
Suppose that in April 2019, Nike had EPS of $2.57 and a book value of equity of $6.23 per share. a. Using the average P/E multiple in Table 10.1, estimate Nikes share price. b. What range of share...
-
Suppose that in April 2019, Nike had sales of $36,397 million, EBITDA of $5,219 million, excess cash of $5,245 million, $3,810 million of debt, and 1573.8 million shares outstanding. a. Using the...
-
How is the accounting for admission to a partnership by purchase of a partner's interest different from the accounting for admission by an investment of assets in the partnership? In your...
-
During international travel, the traveler is subject to the laws of the country where an incident happens. The laws of "negligence" differ greatly from one country to another, so that the liability...
-
Use a graph to demonstrate the circumstances that would prevail in a perfectly competitive market where firms are experiencing economic losses. Identify costs, revenue, and the economic losses on...
-
Suppose you pay $ 9 , 8 0 0 for a $ 1 0 , 0 0 0 par Treasury bill maturing in 3 months. What is the effective annual rate of return for this investment?
-
Alice is a solicitor in Victoria. Alice runs her own law firm which specialises in criminal law. She often appears in the Victorian Magistrates' Court on behalf of her clients. There is a particular...
-
Contemporary Project Management, questions Explain the "time value of money" and why it is important in project management. Difference between direct and indirect costs A rockslide closes down a...
-
What are retail markdowns? How can the expected level of markdown reductions be used to calculate a products initial gross margin?
-
Choose a company from the SEC EDGAR Web site for your Key Assignment to evaluate for the impact of convergence to IFRS. Review the financial reports and notes of the company you have chosen from the...
-
Why are market prices useful to a financial manager?
-
If canola trades in a competitive market, would a canola oil producer that has a use for the canola value it differently than another investor would?
-
When costs and benefits are in different units or goods, how can we compare them?
-
DatabaseBackup and Recovery Use ofSQL Server to do the following: Perform a proper backup and recovery using SSMS. Perform a proper backup and recovery using T-SQL. Set up an automated backup...
-
Francisca has a budget of 2,400 Chilean Pesos to spend on avocados (A) and beef (B). The price of avocados is 100 Pesos per avocado and the price of beef is 400 Pesos per kg of beef. a) Say that...
-
Discuss the interplay between centralized control mechanisms and decentralized autonomy in hybrid organizational architectures, and their impact on organizational performance?
Deliberate Calm How To Learn And Lead In A Volatile World 1st Edition - ISBN: 0063307642 - Free Book
Study smarter with the SolutionInn App