________ is equal to the total market value of the firm's common stock divided by (the replacement cost of the firm's assets less liabilities).
A)Book value per share
B)Liquidation value per share
C)Market value per share
D)Tobin's Q
E)None of the above.

Question

Quizplus · Accepted Answer

Tobin's Q is equal to the market value of the firm's common stock divided by the replacement cost of the firm's assets less liabilities. It measures the extent to which the market value of the firm is greater than the value of its physical assets. A Tobin's Q greater than 1 indicates that the market value of the firm is greater than its replacement cost, while a Tobin's Q less than 1 indicates the opposite. Therefore, Tobin's Q provides insight into whether the market believes the company is poised for future growth or in a position of weakness.

________ Is Equal to the Total Market Value of the Firm's