Glossarytaught in M5.06
Book to bill
Also called book-to-bill ratio, order intake ratio.
New orders won divided by revenue recognised in the same period. Above one, the order book is growing.
An information technology services firm booking ₹1,320 crore against ₹1,200 crore of revenue reports 1.1.
Book to bill is a leading indicator of revenue because today's bookings are next year's billings. Several consecutive quarters below one mean revenue will decline, whatever the current growth rate says.
Duration complicates it. Large multi-year deals inflate bookings in the quarter they are signed and convert to revenue over five years, so a single quarter's figure can mislead in both directions.
Use a four-quarter rolling ratio.
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