American Airlines Invested Capital vs Enterprise Value Analysis

Invested Capital vs Enterprise Value

Invested Capital

Invested capital represents the total cash investment that shareholders and debt holders have contributed to American Airlines Group Inc. There are two different methods for calculating American Airlines Group invested capital: operating approach and financing approach. Understanding ##company1# invested capital allows investors to to calculate measures of performance such as return on invested capital or return on capital employed. Invested capital is an input into the calculation of Return on Invested Capital, and is calculated as: Total Debt plus Total Assets minus Goodwill and Intangible Assets minus Cash and Equivalents minus Current Liabilities. Please note this calculation method is subject to change.

Enterprise Value

Enterprise Value (or EV) is usually referred to as American Airlines theoretical takeover price. In the event of an acquisition, an acquirer would have to take on American Airlines Group debt, but would also pocket its cash. Enterprise Value is more accurate representation of American Airlines value then its market capitalization because it takes into account all of American Airlines Group Inc existing debt. Enterprise value is a measure of the value of a business as a whole, calculated as Market Capitalization plus Total Debt USD minus Cash and Equivalents USD.

Accounts Relationship

Invested Capital vs Enterprise Value

Significance: Very Strong Relationship

Overlapping area represents amount of trend that can be explained by analyzing historical patterns of American Airlines Group Invested Capital account and Enterprise Value

Correlation Coefficient

0.88
Relationship DirectionPositive 
Relationship StrengthStrong