American Airlines
Definition
American Airlines is one of the largest airline companies in the United States, offering domestic and international flights. It is a publicly traded company that raises capital through equity and debt financing to fund its operations and expansion.
5 Must Know Facts For Your Next Test
- American Airlines issues common stock as part of its equity financing strategy.
- The company uses both short-term and long-term debt instruments to raise capital.
- American Airlines' cost of equity can be calculated using the Capital Asset Pricing Model (CAPM).
- The firm's weighted average cost of capital (WACC) takes into account both its equity and debt financing costs.
- Changes in interest rates directly impact American Airlines' cost of debt and overall WACC.
Review Questions
- How does American Airlines raise capital through equity financing?
- What methods does American Airlines use for debt financing?
- Why is it important for American Airlines to calculate its weighted average cost of capital (WACC)?
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Related terms
Equity Financing: Raising capital by selling shares of stock in the company.
Debt Financing: Raising capital by borrowing funds that must be repaid with interest.
Weighted Average Cost of Capital (WACC): The average rate of return a company is expected to pay its security holders to finance its assets.
