The typical practice of public utility regulation involves an extensive audit of cost information to establish compensatory revenue requirements. Much of this effort could be avoided if regulators could rely on financial indicators of firm performance. In PWP-013, Gilbert and Nagler examine the applicability of financial indicators for the regulation of utilities. A common financial index is the firm's market-to-book ratio, or Tobin's q. Tobin's q differs from commonly reported market-to-book ratios, which include only equity capital and are not corrected for the effects of inflation and arbitrary accounting rules. These adjustments have very large quantitative impacts. Over the period 1969-1988, the stockholder equity market-to-book ratio of 114 utilities averaged 1.03. The adjusted Tobin's q values for these utilities averaged only 0.43 and dropped as low as 0.25 in 1981. These results suggest caution in the use of market-to-book data for utility regulation.