Siemens 2006 Annual Report Download - page 250

Glossary
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Glossary
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Accumulated benefit A measure to determine a company’s pension-related “additional minimum liability.” The ABO is
obligation (ABO) based on the same computational methodologies as the projected benefit obligation (PBO), except for
compensation levels. The ABO applies to past and current compensation levels. It does not incorporate
compensation increases.
American depositary Negotiable share certificates issued by major U.S. banks, related to non-American shares deposited
receipts (ADRs) with them. ADRs are generally issued in a ratio of 1:1.
Asset management The process of managing corporate assets in order to enhance operational efficiency while minimizing
costs and associated risks.
Benchmarking A technique used to compare the products, services, processes and financials within an organization,
in relation to “best of practice” in other similar organizations.
Business portfolio The aggregate total of business areas in which Siemens is active.
Captive finance unit A financial services unit organized as a business within an industrial enterprise that offers financial
solutions primarily to customers of the operating units of that enterprise.
Cash flow The net cash inflow or outflow for a specific time period.
Cash management The management of cash and cash equivalents within an organization to optimize financial activities.
Commercial paper Short-term loan issued in the open market by companies with strong credit ratings. Maturities typically
range from 2 to 270 days.
Consolidated financial statements Financial statements that bring together all assets, liabilities, net worth, results of operations and cash
flows of two or more affiliated companies, as though the business were in fact a single economic entity.
Corporate Treasury A corporate function responsible for ensuring the availability of company-wide financing and cash man-
agement, including consulting services involving issues of corporate finance, interest rates and
currencies, liquidity management and all other questions related to the financial management of
operations.
Cost of capital The rate that a company must pay for its capital.
Debt-to-equity ratio Total long-term debt divided by total shareholders’ equity.
Deferred taxes Assets and liabilities arising from the different treatment of transactions for financial and tax reporting
purposes.
Derivative A financial instrument that derives its value from the price or expected price of an underlying asset
(e.g. a security, currency or bond).
Discontinued operations A separate unit of an enterprise (clearly distinguishable from the rest of the entity) that has been
disposed of or is classified as held for sale, if the unit’s operations and cash flows are eliminated from
the ongoing operations and the ongoing operations will not have any significant continuing involvement
in the unit.
Equity method Valuation method used to account for interests in companies in which the investor has the ability to
exercise significant influence over the investee’s operating and financial policies (associated companies).
EVA Abbreviation for “economic value added.” EVA equals net operating profit after taxes (NOPAT) less a
charge for capital employed in the business (cost of capital).
Expected long-term rate of The average rate of earnings expected on plan assets.
return on pension plan assets