01 Why does it matter?
Forward order book figures are one of the key indices used to generate investor confidence in listed construction companies and our analysis of the order books of UK construction firms shows widespread inconsistency in how the figures are assembled. Also, we identified a significant discrepancy between a rise in order book value and static share prices. In December 2011, the total order book figure rose 1.85% to £56.45bn compared with the year before, which is not reflected in share price movements.
02 Doing it by the book
Standard best practice in assembling a firm’s order book should be adopted by all companies in the sector as this will improve the reliability of the figures. There are a number of ways to do this. First, when compiling the order book, companies need to separate out orders by organisational division and the geography of these orders to enable investors to clearly identify growth areas to aid investment decisions.
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