Reconcile movements in the order book
Begin with the published definition. Does “orders received” already exclude cancellations, and are price amendments, acquired contracts or foreign exchange shown separately? Suppose opening backlog is €90 million, gross new orders €28 million, deliveries recognised against backlog €20 million and cancellations €6 million. With no other changes, closing backlog is €92 million. Gross book-to-bill is 1.4 if the corresponding billings are €20 million; net of cancellations it is 1.1. Using net orders and deducting cancellations again would understate the closing stock.
Find out why delivery slowed
More outstanding work may signal strong demand, a missing component or a customer deferring acceptance. These explanations have different implications for margin and cash. Group orders by expected delivery window and identify how much has already moved beyond the original date. Check deposits, cancellation rights and whether a framework agreement specifies quantities. A price-only increase in an order book can also raise its reported value without adding hours of production.
Connect company figures to industry data cautiously
The German manufacturing stock-of-orders index tracks unfilled orders across selected branches; it is not a forecast of one factory’s revenue. Compare a volume index with output volume and a value index with a nominal company measure. A longer order book has greater economic value only to the extent contracts can be served profitably, on time and on enforceable terms.
Practical check
Reconcile opening and closing orders before interpreting book-to-bill. Flag late, cancellable and low-margin work separately from firm scheduled deliveries.