Siemens 2008 Annual Report Download - page 320

224 Glossary
Glossary
AAmerican depositary
receipts (ADRs)
Negotiable share certicates issued by major U.S. banks, related to non-American shares deposited 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 efciency while minimizing costs
and associated risks.
BBenchmarking A technique used to compare the products, services, processes and nancials within an organization with the best
practices at other, similar organizations.
Business portfolio The aggregate total of business areas in which Siemens is active.
CCaptive finance unit A nancial services unit organized as a business within an industrial enterprise that offers nancial solutions
primarily to customers of the operating units of that enterprise.
Cash conversion rate Measures the proportion of prot that is converted into free cash ow.
Cash ow The net cash inow or outow for a specic time period.
Cash management The management of cash and cash equivalents within an organization to optimize 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 financial statements Financial statements that bring together all the assets, liabilities, net worth, results of operations and cash ows
of two or more af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 nancing and cash management,
including consulting services involving issues of corporate nance, interest rates and currencies, liquidity manage-
ment and all other questions related to the nancial management of operations.
Cost of capital The rate that a company must pay for its capital.
DDebt-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 nancial and tax reporting purposes.
Defined benefit obligation (DBO) A measure to determine pension liabilities. The DBO is the actuarial present value of employees’ vested and non-
vested pension benets as of a specic date (including compensation increases), attributable to employee services
performed as of that date.
Derivative A nancial instrument that derives its value from the price or expected price of an underlying asset
(for example, 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 classied as held for sale, if the unit’s operations and cash ows are eliminated from the ongoing operations and
the ongoing operations will not have any signicant continuing involvement in the unit.
EEquity method Valuation method used to account for interests in companies in which the investor has the ability to exercise
signicant inuence over the investee’s operating and nancial policies (associated companies).
Expected long-term rate of
return on pension plan assets
The average rate of earnings expected on plan assets.
FFree cash ow A measure of operative cash generation. It represents net cash provided by (used in) operating activities less cash
used for additions to intangible assets and property, plant and equipment.
Fully diluted Earnings per share are fully diluted when they reect the effects of an assumed conversion or the exercise of all
potentially dilutive securities or stock options.
Functional costs Functional costs include cost of sales, R&D expenses, marketing and selling expenses, and general administration
expenses.
Funded status of pension plan The difference between a pension plan’s dened benet obligation (DBO) and the fair market value of assets
designated to the pension plan (plan assets) as of a specic date.