Adidas 2003 Annual Report Download - page 161

DSO (DAYS SALES A financial indicator that shows the average number of days it takes to
OUTSTANDING) /// convert a company’s accounts receivable into cash. This serves as an
indicator of collection efficiency. It is calculated by dividing accounts
receivable by sales and multiplying this by the number of days in the
respective period.
EQUITY RATIO /// A ratio which shows the role of shareholders’ equity within the financing
structure of a company. It is calculated by dividing shareholders’ equity
by total assets.
EQUITY-TO-FIXED- The equity-to-fixed-asset ratio defines the percentage of non-current
ASSET RATIO /// assets financed by equity. It is calculated by dividing equity by non-
current assets.
FAIR VALUE /// Amount at which assets are traded fairly between business partners.
Fair value is often identical to market price.
FINANCIAL LEVERAGE /// A ratio which reflects the role of borrowings within the financing
structure of a company. It is calculated by dividing net total borrowings
by shareholders’ equity.
FORWARD CONTRACT /// Agreement to exchange amounts of one currency for another currency
at an agreed fixed rate at a future date.
FUNCTIONAL A currency in which a company conducts most of its business
CURRENCY /// and reports its financial results to the parent company or the investing
public.
GOODWILL /// An 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 aquired at the purchase date.
HARDWARE /// This category of sporting goods comprises all kinds of sports equip-
ment that is used rather than worn by the athlete, such as balls, skis
and golf clubs.
HEDGING /// A strategy used to minimize 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.
IBA /// International Boxing Association
IFRS (INTERNATIONAL Reporting standards (formerly called IAS), which have been adopted by
FINANCIAL REPORTING the International Accounting Standards Board (IASB), an independent,
STANDARDS) /// international organization supported by the professional accountancy
bodies. The objective is to achieve uniformity and transparency in the
accounting principles that are used by businesses and other organiza-
tions for financial reporting around the world.
INTEREST COVERAGE /// A ratio which indicates the ability of a company to cover net interest
expenses with income before net interest and taxes. It is calculated by
dividing income before interest and taxes by interest.
INTEREST RATE CAPS /// Option contracts which place an upper limit on a floating interest rate.
The writer of the cap is required to pay the holder of the cap the
difference between the floating rate and the reference rate when that
reference rate is exceeded. There is a premium to be paid by the buyer
of such a contract as market price for the potential pay-out.
INTERNATIONAL An accounting body which rules on controversial accounting issues.
FINANCIAL REPORTING Its interpretations (SIC) are approved by the International Accounting
INTERPRETATIONS Standards Board (IASB) and, once adopted, are binding on all IFRS
COMMITTEE /// users.
IPO (INITIAL PUBLIC The first public placement of shares by a private company.
OFFERING) ///
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