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:
“People are lucky and unlucky not according to what they get absolutely, but according to the ratio between what they get and what they have been led to expect.”
—Samuel Butler (1835–1902)