Financial Glossary
American Depository Receipt (ADR)
Physical certificate proving ownership in one or several American Depositary Shares (ADS). The terms ADS (see “American Depositary Share”) and ADR are often used interchangeably. Fresenius Medical Care’s ordinary and preference shares are listed on the New York Stock Exchange (NYSE) in the form of ADR.
American Depository Shares (ADS)
Share certificate traded at U.S. exchanges, representing (parts of) shares of a foreign company.
Days Sales Outstanding (DSO)
Indicates the average number of days it takes for a receivable to be paid. A shorter DSO results in less interest for the creditor and a lower risk of default.
Debt / EBITDA Ratio
Important indicator in corporate management. It compares a company’s debt to earnings before interest, tax, depreciation and amortization and other non-cash charges.
Dividend
Portion of a company’s profits. The profit to be distributed divided by the number of outstanding shares shows the dividend per share. The dividend is paid to shareholders usually once a year in the form of cash, stock or tangible assets.
EBIT (Earnings Before Interest and Taxes)
This is used to assess the company’s earnings position. More precisely, it is the operating result before earnings from financial activities and investments.
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)
Corresponds to cash flow before taxes.
Free Cash Flow
Net cash from operating activities less net capital expenditures (purchases of property, plant and equipment as well as intangible assets, less acquisitions and dividends).
Free Float
The proportion of a company’s listed shares that is freely available for trading.
Gross Domestic Product (GDP)
Total value of goods and services produced in a national economy over a particular period of time, usually one year.
Kommanditgesellschaft auf Aktien (KGaA)
A German legal form meaning ’partnership limited by shares’. An entity with its own legal identity in which at least one general partner has full liability (personally liable shareholder, or ’Komplementäraktionär’), while the other shareholders have an interest in the capital stock divided into shares without being personally liable for the debts of the company.
Market Capitalization
Number of shares multiplied by the share price.
Net Operating Profit Adjusted for Taxes (NOPAT)
Earnings before interest and taxes (EBIT) less taxes. It shows the profit a company would achieve in the event of pure equity financing. In contrast to EBIT, NOPAT does not take into account the tax savings which a company generates as a result of high debt.
No-par Share
Stock issued without a nominal value.
Operating Margin
Earnings before interest and taxes (EBIT) divided by revenues.
Ordinary and Preference Shares
The capital stock of the Company consists of ordinary and preference shares, both of which are bearer shares. Preference shares are non-voting, but are entitled to a dividend exceeding that of ordinary shares. The distribution of the minimum dividend on preference shares takes precedence over the distribution of a dividend on ordinary shares.
Return on Invested Capital (ROIC)
The return on a Company’s adjusted invested capital or the NOPAT divided by average invested capital. Invested capital consists of current and non-current assets plus accumulated goodwill amortization less cash and cash equivalents, deferred tax assets, accounts payable (including those due to related parties), accrued expenses and other liabilities (including income tax accruals).
Return On Operating Assets (ROOA)
EBIT divided by average operating assets. Operating assets consist of cash and cash equivalents, accounts receivable (including those due from related parties), inventories, prepaid expenses and other current assets, non-current assets, less non-current deferred tax assets and accounts payable (including those due to related parties).
Revenue
The amount of money a company actually receives from its activities, mostly from sales of products and / or services to customers.
Sarbanes-Oxley Act (SOX)
A law aimed at corporations and their auditors designed to improve financial accounting. The intention of SOX is to strengthen the confidence of shareholders and other stakeholders by extending regulations which relate to financial reporting and internal monitoring systems. SOX requirements include strict obligations for a company’s management regarding the provision of complete and correct information.
Securities and Exchange Commission (SEC)
A federal agency that regulates and monitors the U.S. financial markets.
Share index
Indicates the development of the stock market as a whole and / or of individual groups of shares (e.g. DAX, MDAX, TecDAX, SDAX). Share indices act as a guide for investors to help them identify trends in the stock market. The index calculation is based on a weighted value for the average development of the stock corporations that make up the index. Share indices can be calculated as price indices or performance indices
U.S. GAAP
United States Generally Accepted Accounting Principles.
Working Capital
Current assets less current liabilities. The higher the working capital, the more secure a company’s liquidity position.
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