Tobin's Q
Tobin's Q Ratio is calculated as the market value of a company divided by the replacement value of the firm's assets.
Tobin's Q greater than 1 implies that a company's stock is more expensive than the replacement cost of its assets. It indicates higher management's efficiency and higher values of intangibles like networks or the stock is overvalued.
In case of bidder management holds less 5%, when bidder offer stock to M & A, bidder stock price goes down.
Bidder's Q > Target Q
Tobin's Q = Market Price / Book value
Tobin's Q greater than 1 implies that a company's stock is more expensive than the replacement cost of its assets. It indicates higher management's efficiency and higher values of intangibles like networks or the stock is overvalued.
In case of bidder management holds less 5%, when bidder offer stock to M & A, bidder stock price goes down.
Bidder's Q > Target Q
Tobin's Q
![Tobin's Q]()
Reviewed by Sourabh Soni
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Friday, December 27, 2013
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