Given below formula to find Tobin's Q ratio. This ratio is defined as Total Market Value of Firm / Total Asset Value of Firm. This ratio helps you analyze your company's value in the stock market. The Tobin's Q Ratio formula is devised by James Tobin of Yale University. This ratio hypothesizes the combined market value of all the companies on the stock market. Just divide the total market value of firm by the total asset value of firm to calculate the ratio.
The Tobin's Q ratio formula helps to analyze the market value of a company using the replacement value of the firm's assets which should be about equal to their replacement costs.