P/B Ratio
In the case of inflationary time, Q will be lower than P/B ratio, conversely it will be higher than Q. During periods of very high inflation, the book value would not reflect the cost of replacing a firm's assets, since the inflated prices of its assets would not be reflected on its balance sheet.
Read more about this topic: Tobin's Q
Famous quotes containing the word ratio:
“Personal rights, universally the same, demand a government framed on the ratio of the census: property demands a government framed on the ratio of owners and of owning.”
—Ralph Waldo Emerson (1803–1882)