Siemens 2007 Annual Report Download - page 326

326 Glossary
Glossary
Accumulated benefi t A measure to determine a company’s pension-related “additional minimum liability.” The ABO is based on
obligation (ABO) the same computational methodologies as the projected benefi t 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 certifi cates 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 effi ciency while minimizing
costs and associated risks.
Benchmarking A technique used to compare the products, services, processes and fi nancials 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 fi nance unit A fi nancial services unit organized as a business within an industrial enterprise that offers fi nancial
solutions primarily to customers of the operating units of that enterprise.
Cash conversion rate Measures the proportion of profi t that is converted into free cash fl ow.
Cash fl ow The net cash infl ow or outfl ow for a specifi c time period.
Cash management The management of cash and cash equivalents within an organization to optimize fi nancial 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 fi nancial statements Financial statements that bring together all assets, liabilities, net worth, results of operations and cash
fl ows of two or more affi liated 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 fi nancing and cash manage-
ment, including consulting services involving issues of corporate fi nance, interest rates and currencies,
liquidity management and all other questions related to the fi nancial 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 fi nancial and tax reporting
purposes.
Derivative A fi nancial 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 classifi ed as held for sale, if the unit’s operations and cash fl ows are eliminated from the ongoing
operations and the ongoing operations will not have any signifi cant 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 signifi cant infl uence over the investee’s operating and fi nancial policies (associated companies).
EVA Abbreviation for “economic value added.” EVA equals net operating profi t 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
A
B
C
D
E