Tobin's Q Relates the Market Value of a Firm's Assets

question 37

Multiple Choice

Tobin's Q relates the market value of a firm's assets to which one of the following?

• A) Initial cost of creating the firm
• B) Current book value of the firm
• C) Average asset value of similar firms
• D) Average market value of similar firms
• E) Today's cost to duplicate those assets

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Definitions:

Productive Capacity

The maximum output a system, entity, or product can produce using its current resources and constraints.

Net Accounts Receivable

Represents the total money owed to a company by its customers minus any allowances for doubtful accounts.

Expected Net Realizable Value

The estimated selling price of goods minus the cost of their sale or completion, reflecting the expected proceeds from the sale of inventory.

Historical Cost

The original monetary value of an economic item, reflecting its cost at the time of purchase or acquisition, rather than its current value.