# Book-to-Bill Ratio

## What Is the Book-to-Bill Ratio?

A book-to-bill ratio is the ratio of orders received to units sent and billed for a predefined period, generally a month or quarter. It is a widely involved measurement in the technology industry, explicitly in the semiconductor equipment sector.

Investors and analysts closely watch this ratio for an indication of the performance and outlook for individual companies and the technology sector as a whole. A ratio over one suggests a bigger number of orders were received than filled, showing strong demand, while a ratio below one infers more fragile demand.

## The Formula for the Book-to-Bill Ratio Is:

$\text = \frac{\text}{\text}$

## Understanding the Book-to-Bill Ratio

A book-to-bill ratio is regularly utilized for measuring supply and demand in unpredictable enterprises like the technology sector. The ratio measures the number of orders coming in compared to the number of orders going out. A company satisfying orders surprisingly has a book-to-bill ratio of 1. For instance, Company A books 500 orders for parts and afterward ships and bills every one of the 500 orders. The booked and billed orders have a ratio of one, or 500/500.

The book-to-bill ratio uncovers how rapidly a business satisfies the demand for its products. The ratio likewise shows the strength of a sector, for example, aviation or defense manufacturing. It might likewise be utilized while deciding if to purchase stock in a company.