A Study on Book-to-Bill Ratio in Machinery Manufacturing Industry

Abstract

　We adopted the book-to-bill ratio (BB ratio), which is a leading indicator of supply and demand in the semiconductor market, as an independent variable in the capital investment model for semiconductor companies and semiconductor production equipment companies that we constructed earlier. The BB ratio above 1.0 indicates that demand is strong and business confidence and market conditions are favorable for the industry. Conversely, the BB ratio below 1.0 indicates that there is an excess of supply and that future business confidence and market conditions are sluggish. In this paper, we examine the feasibility of calculating the BB ratio in the machinery manufacturing industry, which is one of the order-oriented industries like semiconductor production equipment companies, based on disclosure materials such as annual securities reports. We also examine the correlation between the calculated the BB ratio and capital investment in the machinery manufacturing industry and consider its usefulness as an independent variable in the capital investment model.