Book-to-Bill Ratio
Ratio of orders received to orders shipped/invoiced, indicating whether the order book is growing or shrinking
What is Book-to-Bill Ratio?
Book-to-bill ratio compares the value of orders booked with the value invoiced in the same period. It shows whether demand is growing faster than the business is delivering.
Manufacturers use it as a leading indicator of future revenue and workload.
How this KPI is measured
- Function
- Sales
- Sub-function
- Order Management
- Industry
- Manufacturing
- Type
- Leading
- Impact
- Revenue
- Unit
- x
- Measurement frequency
- Monthly / Quarterly
- Formula
- Value of orders booked / Value of orders billed (invoiced) in same period
How to calculate it
Divide the value of orders booked by the value billed in the same period.
For example, if a manufacturer booked 12,000,000 of orders and billed 10,000,000, the ratio is 1.2.
A ratio above 1 means the order book is growing. Below 1 means it is shrinking. Look at trends over several periods, since single periods can vary.
Where it is used
Forecasting revenue
See future demand.
Planning capacity
Prepare for rising or falling workload.
Spotting turning points
Notice demand shifts early.
How to improve it
Tips and common mistakes
- Long lead times delay the effect on revenue.
- Cancellations reduce the true order book.
- Use with backlog for full context.
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