slacker, book to bill is a classic measure for the semiconductor business, though it can be used for any sector. It is the simple ratio of orders booked to orders shipped during any specified period. Example:
Dancelot, Inc., which makes designer zoot suits (of course), is computing their book to bill ratio for the first quarter of 1999:
The booked a net of $10,000 in orders (new orders - cancellations)
They shipped $6,000 to customers (couldn't ship any more due to a shortage of components, in this case, sequins)
Their book to bill (b:b or btb) = $10,000/$6,000 = 1.67
Whatever backlog Dancelot, Inc. started the first quarter with has increased by $6,000.
Notes:
1. Usually btb is figured using dollars, since the average selling price may vary from quarter to quarter due to price changes or mix shifts.
2. In the Dancelot Inc. example, their 1.67 btb may not be a good omen. Due to the components shortage, they are delinquent to their commitments, and some of their customers might cancel their orders and switch to another manufacturer.
Hope this helps.
Frank |
