In early 2018, United Airlines (UAL) had a market capitalization of ($25.14) billion, debt of ($12.73) billion,

Question:

In early 2018, United Airlines (UAL) had a market capitalization of $$25.14$ billion, debt of $$12.73$ billion, and cash of $$5.59$ billion. United also had annual revenues of $$38.72$ billion.

Southwest Airlines (LUV) had a market capitalization of $$28.53$ billion, debt of $$2.24$ billion, cash of $$3.51$ billion, and annual revenues of $$18.25$ 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.

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