Tobin's q

Tobin’s q is an economic ratio that compares the market value of a company's assets to their replacement cost. Essentially, it shows how the market values a company’s investments relative to how much it would cost to rebuild those assets. A q greater than 1 indicates the market values the assets more than their replacement cost, encouraging investment and expansion. Conversely, a q less than 1 suggests the market values the assets less than their replacement cost, which might discourage investment. Tobin’s q helps assess whether companies are likely to invest in new projects based on current market conditions.