In the finance literature tobin q is an important and widely accepted measure of corporate performance The q ratio was introduced by James Tobin in 1969; and defined as the ratio of market value of assets divided by replacement cost of assets Although there is a concensus about calculation of market value of assets; there is a confusion about calculation of replacement cost of assets In this paper; first different calculations methods of Tobin’s q are examined Second it is discussed about the importance of Tobin’s q for business decisions Key words: Tobin q ratio market value replacement cost of assets
In the financial literature tobin q is an important and widely accepted measure of corporate performance The q ratio was introduced by James Tobin in 1969; and defined as the ratio of market value of assets divided by replacement cost of assets Although there is a concensus about calculation of market value of assets; there is a confusion about calculation of replacement cost of assets In this paper; first different calculations methods of Tobin's q are examined Second it is discussed about the importance of Tobin's q for business decisions Key words: Tobin q ratio market value replacement cost of assets
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