Financial Glossary – Q


Q Theory – gives you a ratio of the market value of a company to the net replacement cost of its assets. If q is greater than 1, this suggests that you should invest in that company. If q is less than 1, you should sell – it means the shares are worth more than the stockholders currently expect the company to earn in profit by retaining them. Also known as the q Ratio, Tobin’s q, Tobin’s q Theory, or Kaldor’s V.

Qualification – refers to a pass of an exam or an official completion of a course. There are many jobs that people cannot work in without the necessary qualifications. For example, to work as a medical doctor, you must have a university degree plus a medical licence.

Quantity Theory of Money – a theory that states that the money supply and prices in an economy go up and down in direct proportion to each other. When the money supply goes up, so do price levels by approximately the same percentage – the same happens when the money supply declines. It is the foundation stone of monetarism.

Quick Ratio – measures a company’s ability to use its most liquid assets to clear all current liabilities. It is an indicator of a business’ financial strength.

Quitclaim Deed – a legal instrument in which the owner of a property (grantor) transfers interest to another person (grantee). The grantor gives up all rights to the grantee.

Quota – in international trade the term refers to the imposition of limits in either the quantity or monetary value of targeted imported goods or services. Quotas may be directed at imported goods or specific countries. In business, a quota could mean the sales target that sales reps or their departments have to meet by a speficied date. Basically, the term means a set amount.