Tobin's Q Formula. Only company a has market value of debt available so we should use the tobins q formula which uses book value of debt to work out the ratios. This ratio hypothesizes the combined market value of all the companies on the stock market.
The formula for tobins q ratio or kaldors v for a group of corporations country. This ratio is named after nobel economics laureate james tobin of yale university. Using the formula we can calculate that tobins q is.
This ratio is named after nobel economics laureate james tobin of yale university.
If the ratio is more than 10 it means the company or market is overvalued given that the firms market value is more than its replacement value. How does tobins q ratio work. Gompers ishii and metrick 2003 qje following kaplan and zingales 1997 qje define tobins q as. The tobins q ratio formula is devised by james tobin of yale university.