Manufacturing, autos and logistics
Book-to-bill ratio
New orders received divided by revenue billed in the same period.
Facts checked against sources onWhat does Book-to-bill ratio mean?
The book-to-bill ratio is the value of orders booked in a period divided by the revenue billed (delivered) in that period. Above 1 means orders are coming in faster than the company delivers, so its backlog is growing; below 1 means the backlog is shrinking. Example: a company books 1.2 billion of orders in a quarter and bills 1 billion of revenue, so its book-to-bill is 1.2. It is watched closely in industrial equipment, defence and semiconductor equipment. One large order can swing it for a quarter, so look at the trend over several periods.
Where does it come up in case interview prep?
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Related terms
- Backlog (order book)The value of orders a company has received but not yet delivered.
- RevenueMoney earned from sales, before costs.
- Run rateCurrent performance scaled up to a full year.
- OEM (original equipment manufacturer)In autos and machinery, the company that designs, assembles and brands the final product.
- Tier 1 supplierA supplier that sells complete parts or systems directly to the carmaker.
- Vehicle platformA shared set of engineering underpinnings used for many car models.
- Battery pack costThe cost of an electric vehicle's battery pack, usually quoted per kWh of capacity.
- Installed baseThe number of a company's machines or systems currently in use at customers.
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