Definition for : Tobin's Q

Tobin's Q is a ratio devised by James Tobin of Yale University, Nobel Laureate in Economics, who hypothesised that the combined Market value of all the companies on the Stock market should be about equal to their replacement costs. Tobin's Q ratio is calculated by dividing the Market value of Assets by their replacement Value. Also called the Q ratio.

(See Chapter 31 Valuation techniques of the Vernimmen)

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