Reebok 2009 Annual Report Download - page 227

ADDITIONAL INFORMATION Glossary 223
Days of sales outstanding (DSO)
Average time of receipt of outstanding
payments from customers.
Diluted earnings per share (Diluted EPS)
Performance indicator used to gauge a
company’s earnings per share, assuming that
all stock options and conversion rights related
to a convertible bond are exercised, which
would result in an increase of the number of
shares outstanding.
Diluted EPS = (net income + interest expense
on convertible bonds net of tax) / (weighted
average number of shares outstanding during
the year + weighted share options + shares
from assumed conversion of convertible
bonds).
D&O liability insurance
Directors and Officers (D&O) liability insurance.
Protects directors and officers from liability
and litigation from actions against them,
claiming wrongdoing in connection with the
company’s business.
Earnings per share (EPS) see Basic earnings
per share and Diluted earnings per share
EBITDA
Earnings before interest, taxes, depreciation
and amortisation.
Emerging markets
Developing countries showing potential for
growth in both economic strength and private
wealth in the future. For the adidas Group,
emerging markets are the developing countries
of Asia (excluding Japan, South Korea and
Singapore), Eastern Europe, Latin America
and Africa.
Enterprise Resource Planning (ERP)
A business management system that
integrates all facets of the business, including
planning, manufacturing, sales and marketing.
Equity ratio
Shows the role of shareholders’ equity within
the overall financing structure of a company.
Equity ratio = shareholders’ equity / total
assets × 100.
Equity-to-fixed-assets ratio
Defines the percentage of non-current assets
financed by equity.
Equity-to-fixed-assets ratio = equity / non-
current assets.
Fair Factories Clearinghouse
The Fair Factories Clearinghouse (FFC)
was established in 2004 with the purpose of
improving social, environmental and security
standards and helping create humane working
conditions for workers making consumer
goods globally. Membership now includes
many sporting and consumer goods companies
as well as a wide range of consumer goods
suppliers see www.fairfactories.org.
Fair Labor Association (FLA)
The Fair Labor Association (FLA), a non-profit
labour rights organisation, is a multi-stakeholder
initiative bringing together companies, colleges
and universities and civil society organisations
to improve working conditions worldwide by
promoting adherence to international and
national labour see also www.fairlabor.org.
Fair value
Amount at which assets are traded fairly
between business parties. Fair value is often
identical to market price.
Finance lease
Method of acquiring an asset that involves a
lease with a special leasing company for a
specific, non-terminable initial leasing term.
The investment risk is borne by the lessee.
Financial leverage
Ratio reflecting the role of borrowings within
the financing structure of a company.
Financial leverage = (net total borrowings /
shareholders’ equity) × 100.
Forward contract
Agreement to exchange amounts of one
currency for another currency at an agreed
fixed rate at a future date.
Franchising
Form of business by which the owner
(franchisor) of a product, service or method
obtains distribution through affiliated dealers
(franchisees). The franchisor offers assistance
in organising, training, merchandising,
marketing and managing in return for a
monetary consideration.
Free cash flow
Cash that is generated by a company’s operating
activities after the deduction of capital expendi-
ture and other cash expenses such as taxes and
interest from the operating profit.
Free cash flow = operating profit + depreciation
and amortisation (incl. goodwill) +/– changes
in operating working capital – capital
expenditures +/– non-operating components.
German Co-Determination Act
Mitbestimmungsgesetz (MitbestG). This act
governs the form of co-determination of
employees in corporations employing more
than 2,000 employees. It stipulates, among
other things, that such a corporation’s
Supervisory Board must be composed of an
equal number of employees and shareholder
representatives.
Goodwill
Intangible asset that quantifies the price that a
buyer of a company has paid for the reputation,
know-how and market position of the acquired
company. Goodwill is the excess of the amount
paid over the fair value of the net assets
acquired at the purchase date.
Go-to-market
All instruments, tools and channels used to
connect with consumers in order to best fulfil
their needs.
Green grass retailers
Golf distribution channel. Small golf specialty
shops typically located at a golf course.
Gross Domestic Product (GDP)
Market value of all finished goods and services
produced within a country in a given period of
time.
GDP = consumption + investment + government
spending + (exports − imports).
Gross margin
Gross profit as a percentage of net sales.
Gross margin = (gross profit / net sales) × 100.
Gross profit
Difference between net sales and the cost of
sales.
Gross profit = net sales – cost of sales.
Halo effect
The halo effect refers to the cognitive bias
effect that when we consider something
good (or bad) in one category, we are likely to
make a similar evaluation in other (related)
categories.
Hardware
Product category which comprises sports
equipment that is used rather than worn by the
athlete, such as bags, balls, fitness equipment,
golf clubs and hockey sticks.
Hedging
A strategy used to minimise exposure to
changes in prices, interest rates or exchange
rates by means of derivative financial
instruments (options, swaps, forward
contracts, etc.) see also Natural Hedges.