Glossary
Financial Glossary
Amortization
Recovery of invested capital through income.
Cash-generating unit
Smallest identifiable group of assets that, by virtue of continued use, generates inflows of liquidity, which, in turn, are largely independent of the cash inflows of other assets.
Cash flow
Key figure that describes the addition to cash and cash equivalents within the financial year.
Compliance
Collective term for measures taken to ensure adherence to all legal obligations, provisions and directives relevant for a company, as well as to corporate governance. Another objective of compliance is to achieve harmonization between corporate actions and social values.
Corporate governance
Rights and obligations of the various parties involved in the company, in particular the shareholders, Board of Management and Supervisory Board.
Derivative financial instruments
Financial instruments that are traditionally used to hedge existing investments or liabilities and whose value is derived from a reference investment (e.g., share or bond).
Discounted cash flow method
Measurement method: future payment surpluses or deficits are discounted with the help of the cost of capital on the measurement date. Taxes due are included in the measurement. The present value determined in this way is the discounted cash flow.
EBIT
Earnings before interest and taxes = operating earnings.
EBITDA
Earnings before interest, taxes, depreciation and amortization.
EBT
Earnings before taxes.
Equity accounting/equity method
Method for recognition of equity investments that are not included in the consolidated financial statements on the basis of full consolidation with all assets and liabilities. The carrying amount of the investment is increased or decreased by the development of the proportionate equity of the investment. This change is recognized in the statement of profit or loss of the parent company.
Forward interest rate swap
An interest rate swap describes a contractual agreement on the exchange of interest payment flows in the same currency where the cash flows are based on a defined amount of capital.
Full consolidation
Method for recognition of subsidiaries that are included in the consolidated financial statements with all assets and liabilities.
Hedging
A strategy of protecting against interest rate, currency and price risks through derivative financial instruments (options, swaps, forward transactions, etc.).
Heritable building right
Right of the leaseholder to have a building on third-party land in return for payment of consideration (known as ground rent).
Hypothetical derivative method
Method of measuring the effectiveness of derivative financial instruments by comparing the change in market value of the derivative to that of a hypothetical derivative that perfectly hedges the risk to be hedged against.
IASB
International Accounting Standards Board: body that develops and publishes International Accounting Standards.
IASs
International Accounting Standards (see also IFRSs).
IFRIC
International Financial Reporting Interpretations Committee: body that publishes interpretations regarding the IFRS accounting standards. After approval by the IASB the interpretations are binding for all IFRS users.
IFRSs
International Financial Reporting Standards (“IASs” until 2001): international accounting regulations that are published by an international independent body (IASB) with the aim of creating a transparent and comparable accounting system that can be applied by companies and organizations all over the world.
Impairment test
Test to determine change in value in accordance with IFRSs.
Interest rate swap
An interest rate swap describes a contractual agreement on the exchange of interest payment flows in the same currency where the cash flows are based on a defined amount of capital.
Joint venture
Legally and organizationally independent company that is jointly established or acquired by at least two independent partners.
Liability method
Method of measurement of deferred tax assets and deferred tax liabilities. A measurement is carried out on the basis of the tax rate that is expected at the time when the future tax burden or relief arises.
Matching principle
IFRSs: recognition of income and expense of the same events in the same period.
Other comprehensive income
All income and expenses that are not contained in the net profit or loss for the year. It includes, for example, foreign currency gains and losses from the translation of foreign financial statements that are reported directly in equity in accordance with IAS 21.
Other long-term benefits
Additional long-term employee benefits that are reported under non-current provisions.
Profit retention
Profits retained in a company for future investment.
Projected unit credit method
Special method for measuring pension and similar obligations in accordance with IFRSs.
Recoverable Amount
Amount presumed to be achievable through use or sale of an asset.
RoCE
Return on capital employed. Indicator that measures the return on capital employed. For this purpose, RoCE compares EBIT with the assets tied up in the company.
Stage of completion method (SoC)
IFRSs: recognition of service orders according to their progress.
Working capital
Difference between current assets and current liabilities. Used to evaluate the liquidity of the company.
Sustainability Glossary
CDP
The CDP (formerly the Carbon Disclosure Project) is a non-profit organization that provides a platform for the publication of environmental data from companies and municipalities. On a voluntary basis, they are called upon to fill out questionnaires in order to collect information, for example on CO2 emissions, climate risks, etc.
CKD
The CKD (Completely Knocked Down) method involves combining vehicle parts from individual deliveries from suppliers and manufacturers, packaging them into specific kits and then delivering them to the appropriate foreign assembly plants via sea transport.
CO2 equivalents (CO2e)
Uniform measure of the greenhouse effect of various greenhouse gases. The reference value is carbon dioxide CO2. DIN 16258:2013-03 takes the following gases into account: CO2, CH4, N2O, HFC, PFC, and SF6. These six gases are also listed in Annex A of the Kyoto Protocol which extends the United Nations Framework Convention on Climate Change. The GEMIS (Global Emissions Model for Integrated Systems) takes account of CO2, CH4, N2O, C6F14 and C2F6.
CSR
Corporate Social Responsibility. Social responsibility of companies as part of sustainable business operations.
EBT margin
Division of EBT by revenue. The EBT margin is an indicator of the efficiency and profitability of a company.
Equity method/At equity
Method for recognition of equity investments that are not included in the consolidated financial statements on the basis of full consolidation with all assets and liabilities. The carrying amount of the investment is increased or decreased by the development of the pro rata equity of the investment. This change is recognized in the income statement of the parent company.
Global Emissions Model for Integrated Systems (GEMIS)
A life-cycle analysis model to determine material flows with an integrated database for energy, materials, and transport systems. It is available to download free from the International Institute for Sustainability Analysis and Strategy (IINAS) and is used in more than 30 countries to analyze costs and environmental impacts.
Global Reporting Initiative (GRI)
Internationally active organization that works with various stakeholders (including companies, human rights organizations, and environment organizations) to develop guide lines for compiling sustainability reports. The GRI guidelines or standards constitute the most commonly used framework for sustainability reporting around the world.
Greenhouse Gas Protocol
Most widely adopted global standard for uniform account-ing of and reporting on greenhouse gas emissions.
Lean management
Process optimization approach designed to minimize waste and harmonize processes.
Minimum Viable Products
Ein Minimum Viable Product (Minimal funktionsfähiges Produkt) ist die erste minimal funktionsfähige Version eines Produktes, die dazu dient, dieses ein erstes Mal zu testen und schnell aus Kundenfeedback zu lernen und Fehlermeldungen zu beheben.
R&D projects
Research and development projects are ventures that deliver new knowledge or innovations as their main out-come, and are characterized by a pronounced degree of innovation, interdisciplinarity and project risk. The project goals deliberately go beyond the current state of research in science and technology. Funding is provided by the public sector in the form of grants.
Robots and Cobots
Cobots arbeiten im Team mit menschlichen Mitarbeitern zusammen, um diese zu unterstützen. Cobots werden typischerweise in Anwendungen eingesetzt, wo zwingend menschliche Kraft eingesetzt werden muss.
Robots hingegen sind so programmiert, dass sie Aufgaben mit wenig oder gar keiner menschlichen Hilfe ausführen können.
Science Based Targets initiative (SBTi)
A collaboration between leading environment and climate protection organizations which defines a frame-work according to which companies can reduce their greenhouse gas emissions on a scientific basis. One of the SBTi targets is to limit global warming to significantly below 2 °C, as demanded by the Paris Climate Agreement.
Six Sigma
A management system for process improvement and statistical quality targets, and simultaneously a method of quality management. The core element is the description, measurement, analysis, improvement, and monitoring of business transactions with statistical means.
Sustainable Development Goals (SDGs)
In 2015, the United Nations agreed on 17 goals for sustainable development (SDGs) which should be achieved by 2030. The SDGs shape the sustainability debate on national and international levels. As a global target system, they offer a common language and a compass for the challenges of the 21st century.
United Nations Global Compact
Global pact between companies and the United Nations to support socially fair and ecologically sustainable globalization. The members undertake to follow ten principles in the areas of labor and human rights, environment, and anti-corruption in all the countries in which they operate.
Logistic Glossary
TEU
Twenty-foot container equivalent unit. Standardized container unit with a length of 20 feet (1 foot = 30 cm).
