What is the book-to-bill ratio?
Book-to-bill ratio is orders won divided by revenue billed in the same period. Above 1 means backlog is growing; below 1 means the company is delivering contracted work faster than it replaces it. The ratio is best known from the semiconductor equipment industry, and it reads the same way in project-heavy services businesses.
Why it matters to a revenue leader
Revenue this quarter mostly reflects work sold in earlier quarters. Book-to-bill tells a revenue leader, and a sponsor, whether the sales team is refilling the tank as fast as operations empties it. In fire protection installation, mechanical retrofits or remediation projects, a run of quarters below 1 turns into idle crews months later, long after the sales problem started. Read it alongside backlog and bid-hit rate, because one large award can lift a single quarter.
How to calculate it
Book-to-bill = value of new contracts booked ÷ revenue billed, same period.
Common mistake: mixing recurring agreement billing with project billing. Calculate project work and recurring work separately, since agreements renew on their own cycle.
Example
Fictitious numbersA specialty contractor books $6.3 million of new project work in a quarter and bills $7.0 million. Book-to-bill is 0.9. Backlog falls by about $700,000, and the revenue leader can see the gap two quarters before it reaches revenue.
"Has project book-to-bill been below 1 for two quarters running, and does the forecast reflect it?"
Sources
- Book-to-Bill Ratio: Definition, How It's Calculated, and Example (Investopedia) checked 9 Oct 2026
- Backlog Definition, Implications, and Real-World Examples (Investopedia) checked 9 Oct 2026