what is the book to bill ratio 
a book to bill ratio is the ratio of orders received to units shipped and billed for a specified period generally a month or quarter it is a widely used metric in the technology industry specifically 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 above 1 implies more orders were received than filled indicating strong demand while a ratio below 1 implies weaker demand formula for the book to bill ratiothe formula to calculate the book to bill ratio is book to bill orders received orders shipped text book to bill frac text orders received text orders shipped book to bill orders shippedorders received understanding the book to bill ratioa book to bill ratio is typically used for measuring supply and demand in volatile industries such as the technology sector the ratio measures the number of orders coming in compared with the number of orders going out a company fulfilling orders immediately as they come in has a book to bill ratio of 1 for example company a books 500 orders for parts and then ships and bills all 500 orders the booked and billed orders have a ratio of 1 or 500 500 the book to bill ratio reveals how quickly a business fulfills the demand for its products the ratio also shows the strength of a sector such as aerospace or defense manufacturing it may also be used when determining whether to purchase stock in a company if a business has a ratio of less than 1 there may be more supply than demand for example company b books 500 orders for parts and then ships and bills 610 orders including some orders from the previous month the booked and billed orders have a ratio of 0 82 for every dollar of orders the company billed only 0 82 of orders were booked that month however if the ratio is greater than 1 there may be more demand than can be efficiently supplied for example company c books 500 orders for parts and then ships and bills 375 orders the book to bill ratio is 1 3 or 500 375 in contrast a business with a ratio of 1 is meeting supply and demand adequately by shipping and billing orders as they are received real world example of the book to bill ratioas a historical example asmpt limited a hong kong based semiconductor and electronics solutions manufacturer reported in april 2024 that its book to bill ratio had moved above 1 after seven quarters asmpt attributed the improvement to bookings growing 17 quarter over quarter coming from semiconductors and surface mount technology 1