Henkel Annual Report 2011 - Henkel AG & Co. KGaA Annual Report ...

164 Glossary
Henkel Annual Report 2011
KGaA
Abbreviation for “Kommanditgesellschaft auf Aktien.”
A KGaA is a company with a legal identity (legal
entity) in which at least one partner has unlimited
liability with respect to the company’s creditors
(personally liable partner), while the liability for
such debts of the other partners participating in
the share-based capital stock is limited to their
share capital (limited shareholders).
Long-term incentive (LTI)
Bonus aligned to long-term financial performance.
Market capitalization
Market value of a company calculated from the
number of shares issued multiplied by their list
price as quoted on the stock exchange.
Net debt
Borrowings less cash and cash equivalents minus
any positive or plus any negative fair values of
hedging contracts covering those borrowings, provided
that the underlying borrowings are themselves
subject to mark-to-market accounting.
Net working capital
Net balance of inventories, trade accounts receivable,
and trade accounts payable.
Non-controlling interests
Proportion of equity attributable to third parties in
subsidiaries included within the scope of consolidation.
Previously termed “minority interests.” Valued
on a proportional net asset basis. A pro-rata portion
of the net earnings of a corporation is due to shareholders
owning non- controlling interests.
Organic sales growth
Growth in revenues after adjusting for effects
arising from acquisitions, divestments and foreign
exchange differences – i.e. “top line” growth
generated from within.
Payout ratio
Indicates what percentage of annual net income
(adjusted for exceptional items) is paid out in
dividends to shareholders, including non-controlling
interests.
Rating
Assessment of the creditworthiness of a company as
published by rating agencies.
Return on capital employed (ROCE)
Profitability metric reflecting the ratio of earnings
before interest and taxes (EBIT) to capital employed.
Return on sales (EBIT)
Operating business metric derived from the ratio of
EBIT to revenues.
Scope of consolidation
The scope of consolidation is the aggregate of
companies incorporated in the consolidated financial
statements.
Share of advertising/Share of market
A company’s share of total advertising spend in
relation to its market share, specific to its active
markets.
Short-term incentive (STI)
Bonus aligned to short-term financial performance.
Supply chain
Encompasses purchasing, production, storage,
transport, customer services, requirements
planning, production scheduling and supply chain
management.
Swap
Term given to the exchange of capital amounts in
differing currencies (currency swap) or of different
interest obligations (interest swap) between two
entities.
Value at risk
Method, based on fair value, used to calculate the
maximum likely or potential future loss arising from
a portfolio.
Viral online marketing campaign
A form of internet marketing aimed at generating
digital WOM (“word of mouth”) via e-mail, social
networks and/or video networks in order to get a
product or brand quickly known. The term “viral”
alludes to the manner by which the information
spreads – like a virus.
Volatility
Measure of fluctuation and variability in the prices
quoted for securities, in interest rates and in foreign
exchange rates.
Weighted average cost of capital (WACC)
Average return on capital, calculated on the basis
of a weighted average of the cost of debt and equity.
WACC represents the minimum return expected of
a company by its lenders for financing its assets.