Glossary of financial terminology

A 


Adjusted operating income
Adjusted operating income does not take into account -> Highlighted items. The management uses this financial indicator in the Group-wide management of GfK’s operating business.

Affiliated companies
Companies which are controlled by the parent.
As a rule, the parent holds the majority of the voting rights and capital of the company

Assets
Resources that are at the disposal of the company as a result of events in the past and which should represent an economic benefit in the future.

Asset structure
The asset structure describes the relationship between non-current assets and current assets. It is determined on the basis of the ratio of non-current assets to current assets multiplied by 100.

Associated companies
-> Minority participations in companies on whose business or company policy a decisive, but not controlling influence is exercised. Associated companies are in principle valued at equity.

B


Borrowings
Total assets less -> Equity.

C


Cash flow
Balance of funds inflow and outflow affecting payment.

Consolidated total income
Consolidated total income attributable to the equity holders plus consolidated total income attributable to minority interests; also referred to as consolidated total income before minority interests.

Cost of sales
Total of all types of operating costs which can be directly allocated to clients’ orders. These include in particular costs for external data procurement, costs for interviewees and interviewers.

Cost of sales accounting
Form of income statement which shows the income achieved in the market during the accounting period. Opposite: total cost accounting. Here the total operating income for the period is shown, whereby the sales and changes in inventories are shown against the total cost. Both forms of accounting produce the same income for the accounting period.

Current assets
The total of all short-term receivables, deferrals, funds, securities and inventories reported on the assets side of the balance sheet.

Current liabilities
The total of all short-term provisions, liabilities and deferrals reported on the liabilities side of the balance sheet

D


Deferred taxes
Tax assets or liabilities reported in the balance sheet to equalize the difference between the tax debt actually assessed and the commercial tax burden based on the financial reporting in accordance with -> IFRS for the commercial balance sheet. The basis for determining deferred taxes is the difference between the value of the assets and liabilities reported in the balance sheet in accordance with ifrs and the local tax balance sheet.

Dividend yield
Dividend per share in relation to the annual closing price.

E


EBIT
Abbreviation for earnings before interest and taxes calculated as -> Operating income plus income from associates plus -> Other income from participations.

EBITDA
Earnings before interest, taxes, depreciation and amortization, calculated as -> EBIT plus depreciation and amortization charges.

Equity
Equity comprises funds from the equity holders available to the company as capital contributions and/or deposits and retained profits as well as equity attributable to minority interests.

Equity ratio
Balance sheet -> Equity in relation to total assets. The higher the indicator, the lower the level of indebtedness.

F


Free cash flow
Cash flow from operating activity less capex.

G


Goodwill
Intangible business asset that represents the value of the intangible assets of a company at the time of its acquisition that are not separately capitalizable, such as the expertise of staff. This is calculated as the purchase price of the company less revalued equity on a pro rata basis.

Gross income from sales
Sales less -> Cost of sales.

H


Highlighted items
The costs that are not taken into account in -> Adjusted operating income: integration costs, amortization on disclosed hidden reserves as part of -> Purchase price allocation, share-based payments and long-term incentives, -> Other operating income and expenses including, in particular, currency effects from the valuation on the reporting date.

I


IAS
The International Accounting Standards (ias) were developed and published by the IASC from 1973 to 2000. Unless specific standards have been revoked, they are still valid in full today. Since the reworking of ias 1 in 2003, the "old” IAS have been collectively referred to as IFRS.
Any existing standards are developed further as ias and all new standards are known as IFRS.

IFRS
The International Financial Reporting Standards (IFRS) are accounting principles developed and published by the IASB. In addition to the actual IFRS, the IAS that are still valid and the interpretations of the IFRIC and sic are grouped under the IFRS.

Impairment
Write-down of assets in addition to scheduled amortization/depreciation, or in place of scheduled amortization/depreciation in the case of intangible assets with an indefinite useful life. Impairment tests are used to establish whether the carrying value of assets is higher than recoverable amount for the asset. The asset is written down to the recoverable value as necessary.

Income
-> Adjusted operating income.

Income from ongoing business activity
-> EBIT plus -> Financial income less -> Financial expenses.

M


Majority participations
-> Affiliated companies.

Margin
A margin represents the relationship of an indicator ( -> Income, -> EBIT, -> EBITDA etc.) to sales.

Minority participations
Generic term for -> Associated companies and -> Other participations. The participation quota is below 50%.

N


Net indebtedness
Liquid funds and securities less pension liabilities and financial liabilities.

Non-current assets
Assets that benefit business operations in the long term. In addition to intangible assets, tangible assets and investments, these include deferred tax assets and other non-current receivables and deferrals.

Non-current liabilities
Total of all long-term provisions, liabilities, deferred tax liabilities and other deferrals reported on the liabilities side of the balance sheet.

O


Operating income
Gross income from sales less -> Selling and general administrative expenses plus -> Other operating income less -> Other operating expenses.

Other financial expenses
Financial expenses that do not result directly from participating interests. These are calculated as interest expenses plus other financial expenses.

Other financial income
Financial income that does not result directly from participating interests. This is calculated as interest income plus other financial income.

Other income from participations
Income from -> Affiliated companies not included in the scope of consolidation and -> Other parti-cipations as well as expenses and income from write-ups or write-downs of book values of investments plus gains/losses from the disposal of participations.

Other operating expenses
Expenses in connection with ongoing business activity, excluding financial expenses, not attributable to -> Cost of sales or -> Selling and general administrative expenses. Examples are -> Impairments, losses from the disposal of fixed assets and exchange losses.

Other operating income
Income from ongoing business activity, excluding financial income, which does not represent sales. Examples are profits on the disposal of fixed assets and exchange gains.

Other participations
Companies in which a participation is held but on whose business policy no decisive influence is exercised. The participation quota is below 20%.

P


Pay-out ratio
Total dividend in relation to consolidated total income.

Profit to sales ratio
-> Consolidated total income in relation to sales.

Purchase price allocation
Allocation of the purchase price when companies are acquired to assets and liabilities not previously reported or not in such amounts.

R


Ratio of net indebtedness to cash flow
Net indebtedness in relation to -> Free cash flow.

Return on capital employed
-> EBIT in relation to average total assets.

Return on equity
Consolidated total income in relation to average shareholders’ equity.

S


Selling and general administrative expenses
Operating costs not directly aligned to individual client orders, such as general marketing or accounting measures.

T


Tax ratio
Tax on income from ongoing business activity in relation to -> Income from ongoing business activity.