Glossary & definitions
Here we have collected financial definitions and specific terms that can be useful to know.
Financial definitions
| Profit and yield measures | Definition | Purpose |
|---|---|---|
| EBIT | Earnings before interest and taxes; operating result. | EBIT is used to analyze the profitability generated by operating activities. |
| EBITA | Earnings before interest, taxes and amortization; operating result (EBIT) plus amortization of assets identified in conjunction with acquisitions. | The key figure is used to assess the Group’s operational profitability before accounting for financing costs, taxes and amortizations of assets identified in conjunction with acquisitions. |
| EBITA adjusted | Earnings before interest, taxes and amortization; operating result (EBIT) plus amortization of assets identified in conjunction with acquisitions adjusted for one-off items. | EBITA adjusted reflects the profitability of the underlying business and enables comparisons between different reporting periods. |
| EBITDA | Earnings before interest, taxes, depreciation and amortization; operating result (EBIT) plus depreciation, amortization and write-downs of intangible assets and tangible fixed assets. | EBITDA is used to evaluate the profitability generated by the operating activities without taking into account financing costs, taxes or depreciation and amortization. |
| EBITDA excl. IFRS 16 RTM adjusted | EBITDA excl. IFRS 16 RTM adjusted is calculated as the company’s reported EBITDA during the last twelve-month period (RTM) excluding IFRS 16 effects, one-off items and adjusted for proforma results for acquisitions. | The key figure is used to calculate the ratio of net debt to adjusted EBITDA RTM, which is to be reported in accordance with the Group’s credit agreement. |
| Operating margin | Operating result (EBIT) in relation to net sales. | The key figure is used to measure the Group’s profitability in its core operations. |
| Return on capital employed (ROCE) | Operating result (EBIT) in relation to average capital employed. | The key ratio measures how effectively the group utilizes its capital to generate profit. |
| Return on equity (ROE) | Result for the year in relation to average equity. | Return on equity is a measure of the Group’s profitability and indicates the return on the capital invested by the owners. |
| Return on total assets (ROA) | Operating result (EBIT) plus financial income in relation to average total assets. | Return on total assets measures the Group’s ability to generate profitability in relation to the capital available. |
| Capital measures | Definition | Purpose |
|---|---|---|
| Cash conversion | Operating cash flow, excluding considerations paid for acquisitions, in relation to EBITDA. | This ratio reflects the Group’s ability to generate cash flow in relation to EBITDA. |
| Capital employed | Total assets less cash and cash equivalents and non-interest bearing liabilities. | The key figure is used to describe the total amount of capital used in the group to generate revenue. |
| Debt/equity ratio | Net debt in relation to reported equity, including non-controlling interests. | The debt-to-equity ratio indicates the extent to which the company’s operations are financed through debt compared to equity. |
| Equity ratio | Equity, including non-controlling interests, in relation to total assets. | The ratio provides a view of the proportion of total assets that have been financed by equity. The key ratio measures the Group’s financial stability and its long-term solvency. |
| Free cash flow | Cash flow from operating activities and investing activities, excluding acquisitions and divestment of operations. | The key figure shows the Group’s ability to generate cash flows that can be utilized for future growth, debt repayment or distributed to shareholders. |
| Free cash flow margin | Free cash flow in relation to net sales. | The result provides an indication of how effectively the Group converts revenue into cash flow. |
| Interest coverage ratio | Operating result (EBIT) plus interest income divided by interest costs. | The key figure is used to assess the Group’s ability to meet its interest expenses on borrowed funds and helps investors and analysts evaluate the company’s financial stability and level of risk. |
| Net debt | Interest bearing liabilities less cash and cash equivalents. | The key ratio provides an indication of the company’s solvency. |
| Share-related measures | Definition | Purpose |
|---|---|---|
| Average number of shares | Weighted average number of shares outstanding during the period. | Average number of shares is used to calculate earnings per share and other financial ratios, giving investors a better understanding of the Group’s value and performance. |
| Earnings per share | Result for the period attributable to parent company shareholders divided by the average number of shares. | The key figure makes it possible to compare different groups during a reporting period as well as to make comparisons between different reporting period for the same group. |
| Other metrics | Definition | Purpose |
|---|---|---|
| Average number of employees (FTE) | The number of employees converted to full-time equivalents (FTE) at the end of each month divided by number of months. | – |
| One-off items | Signifiacant income/one-off items in operating profit. | Significant income/expenses affecting comparability between accounting periods. These items include, but are not limited to, revaluations of additional considerations, restructuring costs, acquisition-related costs and disputes. |
| Operating cash flow | Cash flow from operating activities and investing activities, adjusted for paid taxes and financial items. | Indicates the cash flow from the Group’s core business. |
| RTM | Rolling twelve months. | RTM makes it possible to continuously compare full-year outcomes and to identify changes and trends at an earlier stage. |
Specific terms
After sales
Provision of services, support and spare parts after making an initial sale. This occurs for example in the provision of products which requires regular upgrades.
Business-to-business (B2B)
Sale of goods and services between businesses, such as between a manufacturer and a wholesaler, or between a wholesaler and a retailer.
Business-to-consumer (B2C)
Sale of goods and services between a company and consumers.
Cleanroom
A cleanroom is an environment, typically used in manufacturing or scientific research, that has a low level of environmental pollutants such as dust, airborne microbes, aerosol particles and chemical vapors. More accurately, a cleanroom has a controlled level of contamination that is specified by the number of particles per cubic meter at a specified particle size.
Contract Logistics
Contract logistics is a business model within the framework of supply chain management, which is based on a long-term cooperation between a manufacturer or a dealer of goods and a logistics service provider. The model is normally regulated by a service contract, comprises a considerable business volume and is individually formed.
Digital print
The transfer of information to paper via a digital file that is then printed out with the help of a high-speed printer. This technique is a prerequisite for print-on-demand and makes quick deliveries in small editions possible. Offset technique is still more efficient for larger editions.
E-commerce
Online sales, also known as electronic commerce or internet commerce, refers to the buying and selling of goods or services using the internet, and the transfer of money and data to execute these transactions.
End-to-end solution
An end-to-end solution refers to a comprehensive solution, where all the middle layers or steps are eliminated to optimize performance and efficiency in a process.
FMCG
Fast-Moving Consumer Goods. Refers to products that sell quickly and have a short life cycle and include everyday goods such as food, beverages, and personal care items.
FTE
Number of full-time equivalent employees (FTE) is defined as the number of employees converted into full-time positions.
Fulfillment
This term used to describe a number of steps in the process between production and distribution. They can include assembly, configuration, barcoding, packaging for end customers.
Just-in-time (JIT)
Delivery precision – delivery exactly when the need arises. The concept also entails that customers do not need to store their products.
Life Cycle Management
Services that are carried out during the whole or parts of a product’s life cycle, from when the product is manufactured to it is recycled. Examples of services are delivery, installation, training, maintenance, wiping of data, upgrade of software, refurbishment and reselling or recycling. The service aims to maximize the product’s life and optimize logistics flow in order to reduce the environmental impact.
Offset print
A printing method in which ink and water are spread out on a printing plate that is then pressed against a rubber blanket. This absorbs the ink and transfers it to the paper. The expression offset comes from the fact that the printing plate never touches the paper.
Omni-channel
An integrated way of thinking about people’s relationships with organizations. Rather than working in parallel, communication channels are designed to cooperate and build a coherent, evolving, cross-channel experience. The approach includes channels such as physical locations, FAQ web pages, social media, mobile applications and telephone communication. Companies that use omni-channels give their customers the ability to be in contact with them through multiple avenues at the same time. When talking about omni-channel in connection with sales, it is usually commerce via both stores and e-commerce that is referred to.
Online print
A service where printed matter can easily be ordered via a web-based interface and the user can create their own unique design. Typical products are business cards, catalogues, books, photo products, newsletters, calendars and brochures.
Outsourcing
Companies or organizations choose to let an external party handle an activity or a process. This activity or process is then said to be outsourced.
Packaging
A product manufactured to protect, handle, deliver and present an item.
Supply chain
The movement and storage of goods and or information from point of origin to end-users. Supply chain management can be defined as the design, planning, execution, control and monitoring of activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally.
Warehouse Management System (WMS)
A warehouse management system developed to automate and streamline every stage of the warehouse process. This system helps to increase transparency and optimise various warehouse management tasks in a structured manner, including stock control, inventory management, order picking, as well as goods receipt and dispatch.