Interpreting Order Backlogs
What to check
| Item | Why it matters |
|---|---|
| Backlog size | Coverage of future revenue |
| Book-to-bill | Orders versus revenue in the same period |
| Cancellation terms | How firm the orders really are |
| Delivery window | How far out the backlog extends |
| Customer mix | Concentration risk |
Reading the trend
- A growing backlog with lengthening deliveries can mean capacity limits.
- Shrinking backlog with stable revenue can mean better throughput.
- Always compare like-for-like periods.
Backlog definitions vary by company. Check what each one includes before comparing.