American Depositary Receipt (ADR)
US-traded negotiable certificate of a foreign-based
company held by a US bank that entitles the holder to all dividends and rights of the underlying
stock. ADRs provide a way for Americans to invest in foreign-based companies by buying their
shares in the USA instead of through an overseas exchange.
Asset-Backed Securities (ABS)
Securities (bonds or notes) backed by loan receivables,
accounts
receivable or other quantifiable assets.
Asset Coverage I & II
The extent to which a company’s non-current assets cover its debt
obligations.
They are expressed as a percentage and calculated as follows:
Asset coverage I (%) = (equity + non-current liabilities) / non-current assets.
Asset coverage II (%) = (equity + non-current liabilities) / (non-current assets + inventories).
Athletic Specialty
A largely mall-based retail distribution concept in North America that
focuses
primarily on selling sports and sports lifestyle products to consumers.
Backlogs
Also called order backlogs. The value of orders received for future delivery. At adidas
and Reebok, most orders are received six to nine months in advance, depending on the season.
This information is used as an indicator of future sales performance.
Basic Earnings Per Share (Basic EPS)
Performance indicator used to gauge a company’s
earnings per share, based on the number of shares outstanding (excluding stock options, as well
as options and conversion rights related to a convertible bond).
Basic EPS = net income / weighted average number of shares outstanding during the year.
see also Diluted Earnings Per Share
Beta Factor
Indicates a stock’s relative risk. A beta coefficient of more than one indicates that
the stock has a higher risk than the overall market. Conversely, a beta coefficient of less than
one indicates a lower risk.
Body Maping
Aligning Clima fabric and construction technologies with an athlete’s physiological
zones of heat and sweat production, to optimize dryness and thermal comfort during
sport.
BOUNCE™
Three-dimensional energy management system, consisting of several pieces that can
be placed under the forefoot and / or heel. The pieces are tuned to a particular need such as
cushion and guidance for optimal performance.
Branded Apparel
Apparel products which visibly display specific symbols, trademarks or
other
references to the supplier of the product.
Capital Expenditure
Total cash expenditure (excluding acquisitions and finance leases), net
of any recoverable taxes (e.g. Value Added Tax – VAT) for the purchase, lease or construction of
assets.
Classics
Products designed in an authentic heritage style, targeting sports lifestyle consumers
who seek trendsetting streetwear with authentic origins.
Clearance Sales
Revenues generated outside the course of normal business terms, arising
from commercial decisions by management to clear excess stock usually through specific
channels
and at a significant discount.
Clima
adidas apparel system encompassing the ClimaCool®, ClimaLite®, ClimaWarm® and
ClimaProof® technologies. ClimaCool® is an integrated system of technologies that work
together
to regulate the athlete’s body temperature. ClimaCool® is also utilized as a cooling
system in footwear. ClimaLite® fabric pulls sweat away from the skin to the outer fabric face for
quick evaporation, enhancing the body’s natural temperature regulation. ClimaWarm® is lightweight,
breathable insulation that keeps the athlete dry and comfortable in cold weather conditions.
ClimaProof® is breathable weather protection that keeps wind, rain and snow out while
allowing heat and sweat to escape through evaporation.
Co-Branded Stores
adidas or Reebok stores that are co-branded together with a partner, for
example a sports league such as the NHL or NBA (e.g. NBA Concept Shop in Istanbul, Turkey).
Commercial Paper
Tradeable unsecured promissory notes issued for the purpose of short-term
financing. A commercial paper is issued on an ongoing, revolving basis with maturities
typically
between seven days and 12 months or more.
Concession Corners
Retail space that is fully operated by one brand within the adidas Group.
This distribution channel mainly exists in Asian markets, where no other established channels of
distribution exist.
Convertible Bond
Corporate bond that can be exchanged for a specific number of shares
of a company’s common stock. Convertible bonds tend to have lower interest rates than non-convertibles
because they also accrue value as the price of the underlying stock rises. In this
way, convertible bonds reflect a combination of the benefits of stocks and those of bonds.
Corporate Governance
Distribution of rights and responsibilities among the primary stakeholders
in a company, in particular shareholders, the Executive Board and the Supervisory
Board.
Cost of Sales
Costs of sourcing and manufacturing products. This figure includes costs for
raw materials plus costs of production, freight, customs and delivery to the adidas Group’s sales
organizations.
Credit Spread
Risk premium which represents the yield difference between risk-free government
bonds and corporate bonds with the same duration. A potential investor demands an additional
yield (risk premium = credit spread) for the higher risk of default with corporate bonds
versus government bonds.
Currency Exposure
The adidas Group’s reporting and consolidation currency is the euro. 205
Since the Group produces and sells its products worldwide, the company is exposed to several
currencies, especially US dollar, Japanese yen and British pound. In order to minimize the risk
from increasing / declining exchange rates versus the euro, the adidas Group hedges itself
against the major currencies. see also Hedging
Currency-Neutral
Financial figures translated at prior-year exchange rates. This indicates
increases or decreases to reported figures by eliminating variances arising from currency translation,
thus reflecting the underlying business performance.
Currency Option
see Option
Current Asset Intensity of Investments
Percentage of total assets tied up in current
assets.
Current asset intensity of investments = current assets / total assets.
Customer Flow Management™
A widely used initiative of managing the flow of people and
related information from entry to a retailer’s point-of-sale or specific service area. The aim is to
optimize the consumer’s shopping experience and increase shop sales.
Days of Sales Outstanding (DSO)
Average time of receipt of outstanding payments from
customers.
Demand-Driven Supply Chain
Management of up- and downstream relationships between
suppliers and customers to deliver the best value to the customer at the least cost to the supply
chain as a whole. A clear focus of the concept is this alignment of the supply chain to the customers’
needs, bridging the gap between optimal customer relationship management and the
company’s supply chain management. see also Supply Chain
Diluted Earnings per Share (Diluted EPS)
Performance indicator used to gauge a company’s
earnings per share, assuming that all stock options, options and conversion rights related
to a convertible bond are exercised, which would result in an increase of the number of shares
outstanding.
Diluted EPS = (net income + interest expense on convertible bonds net of tax) / (weighted average
number of shares outstanding during the year + weighted share options + shares from assumed
conversion of convertible bonds).
Directional Accounts
High-profile boutiques and metropolitan retailers that target trendsetting
sports lifestyle consumers.
D&O Liability Insurance
Directors and Officers (D&O) liability insurance. Protects directors
and officers from liability and litigation from actions against them, claiming wrongdoing in connection
to the company’s business.
Earnings per Share (EPS)
Performance indicator that expresses a company’s net income in
relation to the number of ordinary shares issued.
Earnings per share = net income / weighted average number of shares outstanding during the
year.
EBITDA
Earnings before interest, taxes, depreciation and amortization.
Emerging Markets
Developing countries showing potential for growth in both size and importance
in the future. For the adidas Group, emerging markets are the developing countries of
Asia, Eastern Europe, Latin America and Africa.
Equity Ratio
Shows the role of shareholders’ equity within the overall financing structure of
a company.
Equity ratio = shareholder’s equity / total assets.
Equity-To-Fixed-Asset Ratio
Defines the percentage of non-current assets financed by equity.
Equity-to-fixed-asset ratio = equity / non-current assets.
Fair Value
Amount at which assets are traded fairly between business partners. Fair value is
often identical to market price.
Family Footwear Channel
Primarily North American retail distribution channel, catering for
affordable footwear across all age groups.
Finance Lease
Method of acquiring an asset that involves a series of rental payments extending
over the expected lifetime of the asset.
Financial Covenants
A promise in a debt instrument, or any other formal debt agreement,
that certain activities will or will not be carried out.
Financial Leverage
Ratio reflects the role of borrowings within the financing structure of
a company.
Financial leverage = net total borrowings / shareholders’ equity.
ForMotion™
Apparel and footwear technology that enhances the natural movement of sport
for greater comfort, fit and control while athletes are in motion.
Forward Contract
Agreement to exchange amounts of one currency for another currency
at an agreed fixed rate at a future date.
Franchising
Franchising is a form of business by which the owner (franchisor) of a product,
service or method obtains distribution through affiliated dealers (franchisees). The franchisee
offers assistance in organizing, training, merchandising, marketing and managing in return for
a monetary consideration.
Free Cash
Flow Cash that is generated by a company’s operating activities after the deduction
of capital expenditure and other cash expenses such as taxes and interest from the operating
profit.
Free cash flow = operating profit + depreciation and amortization (incl. goodwill) +/– changes in
operating working capital – capital expenditures +/- non-operating components.
German Co-Determination Act
German Mitbestimmungsgesetz (MitbestG). This act governs
the form of co-determination of employees in corporations employing more than 2,000
employees.
It stipulates, among other things, that such a corporation’s Supervisory Board must
be composed of an equal number of employees and shareholder representatives.
GNC (Greg Norman Collection)
Golf brand, acquired as part of the Reebok acquisition on
January 31, 2006. The adidas Group announced the divestiture of the Greg Norman Collection
wholesale business on November 21, 2006. Prior to that, the business was consolidated in the
TaylorMade-adidas Golf segment.
Goodwill
Intangible asset that quantifies the price that a buyer of a company has paid for the
reputation, know-how and market position of the acquired company. Goodwill is the excess of
the amount paid over the fair value of the net assets acquired at the purchase date.
Green Grass Retailers
Golf distribution channel. Small golf specialty shops typically located
at a golf course.
Gross Domestic Product (GDP)
Market value of all finished goods and services produced
within a country in a given period of time.
GDP = consumption + investment + government spending + (exports − imports).
Gross Margin
Gross profit as a percentage of net sales. Gross margin = (gross profit / net sales) x 100.
Gross Profit
Difference between net sales and the cost of sales.
Gross profit = net sales - cost of sales.
Hardware / Hard Goods
Product category which comprises sports equipment that is used
rather than worn by the athlete, such as bags, balls, golf clubs and hockey sticks.
Hedging
A strategy used to minimize exposure to changes in prices, interest rates or exchange
rates by means of derivative financial instruments (options, swaps, forward contracts, etc.).
see also Natural Hedges
High-End Department Stores
Retail format which places emphasis on shopping experience,
selling high- to mid-price products from several merchandise lines under the same roof.
In-House Bank
Internally and centrally managed cash liquidity within the adidas network
of subsidiaries. Organization and implementation through the adidas Group’s Treasury department.
Initial Public Offering (IPO)
First placement of a corporation’s common shares on an
organized
market.
Institutional Investor
Investors such as investment companies, mutual funds, brokerages,
insurance companies, pension funds, investment banks and endowment funds. They are financially
sophisticated, with a greater knowledge of investment vehicles and risks, and have the
means to make large investments.
Interest Coverage
Indicates the ability of a company to cover net interest expenses with
income
before net interest and taxes.
Interest coverage = income before interest and tax / interest.
Interest Rate Cap
Option contract which places an upper limit on a floating interest rate. The
writer of the cap is required to pay the holder of the cap the difference between the floating rate
and the reference rate when that reference rate is exceeded. There is a premium to be paid by
the buyer of such a contract as the market price for the potential pay-out.
International Accounting Standard s Board (IASB)
Independent, privately-funded cooperation
of professional associations dealing with matters of financial accounting and setting and
promoting the IFRS (formerly IAS).
International Financial Reporting Interpretations Committee (IFRIC)
Accounting
body which rules on controversial accounting issues. Its interpretations are approved by the
International
Accounting Standards Board (IASB) and, once adopted, are binding on all International
Financial Reporting Standards (IFRS) users.
International Financial Reporting Standards (IFRS)
Reporting standards (formerly
called IAS) which have been adopted by the International Accounting Standards Board (IASB).
The objective is to achieve uniformity and transparency in the accounting principles that are used
by businesses and other organizations for financial reporting around the world.
Investments
see Capital Expenditure
Joint Ventures
Contractual agreement joining together two or more parties for the purpose
of executing a particular business undertaking.
Key Accounts
Wholesalers or retailers which are primary customers and account for a large
percentage of sales.
KineticFit
Fit system that accommodates the changes in size and shape of an athlete’s foot as
it moves. From impact through toe-off, the foot can change up to half of a shoe size. KineticFit
construction makes use of a series of engineered stretch panels positioned in key areas of the
shoe.
Licensed Apparel
Apparel products, which are produced and marketed under a license agreement
with a sports organization (e.g. FIFA, UEFA, IOC), sports league (e.g. NFL, NBA), professional
team (e.g. Real Madrid, Liverpool) or university (e.g. UCLA, Notre Dame). If visible, the
supplier’s branding is secondary.
Lien
The right to take and hold or sell the asset of a debtor as security or payment for a debt.
Liquidity Ratios I-III
Measures the extent to which a company can quickly liquidate assets to
cover short-term liabilities.
Liquidity I: ((sum of cash + short-term financial assets) / current liabilities) x 100.
Liquidity II: ((sum of cash + short-term financial assets + accounts receivable) / current liabilities)
x 100.
Liquidity III: ((sum of cash + short-term financial assets + accounts receivable + inventories)
/ current liabilities) x 100.
LPGA TOUR
Major US women’s professional golf tour.
Mall
Refers to a building or set of buildings that contain a variety of retail units and independent shops with interconnecting walkways, enabling customers to walk from unit to unit under
one roof.
Market Capitalization
Total market value of all outstanding shares.
Market Capitalization = number of outstanding shares x current market price.
Market Risk Premium
Extra return that the overall market or a particular stock must provide
over the risk-free rate to compensate an investor for taking a relatively higher risk.
Market risk premium = market risk – risk-free rate.
Marketing Working Budget
Promotion and communication spending including sponsorship
contracts with teams and individual athletes, as well as advertising, retail support, events and
other communication activities, but excluding marketing overhead expenses.
Metalwoods
Golf clubs (drivers and fairway woods) which are constructed from steel and / or
titanium alloys. The name also pays homage to persimmon wood, which was originally used in
the creation of these products. This is the largest product category in terms of sales in the golf
market, as well as for TaylorMade-adidas Golf.
Minority Interests
Part of net income which is not attributable to the reporting company.
Outside ownership interests in subsidiaries that are consolidated with the parent company for
financial
reporting purposes.
Mono-Branded stores
adidas, Reebok or Rockport branded stores not operated or owned
by the adidas Group but by franchise partners. This concept is used especially in the emerging
markets, such as China, benefiting from local expertise of the respective franchise partners.
see also Franchising
Motion Analysis Technology (MATT™)
The technology gathers vital swing information and
statistics using multiple high-speed cameras. MATT distills that information to create a three-dimensional
computer-animated image of a player’s swing viewable from every angle. The technology
is typically used for club fitting, swing analysis, biomechanics research and also in the
development process for new golf clubs.
Movable Weight Technology™ (MWT™)
Gives the golfer the power to adjust the clubhead’s
center of gravity by changing the configuration of up to four movable weights, which promotes
changes to the shot’s direction, height, spin and distance.
Natural Hedges
Offset of currency risks that occurs naturally as a result of a company’s
normal
operations, without the use of derivatives. For example, revenue received in a foreign
currency and used to pay known commitments in the same foreign currency.
NBA (National Basketball Association)
Premier professional men’s basketball league
in the USA, comprising 30 teams.
Net Borrowings
Portion of gross borrowings not covered by the sum of cash and short-term
financial assets. If a negative figure is shown, this indicates a net cash position.
Net borrowings = short-term borrowings + long-term borrowings – cash – short-term financial
assets.
NHL (National Hockey League)
Premier professional men’s ice hockey league in North
America, comprising 30 teams from the USA and Canada.
Operating Expenses
Expenses which are not directly attributable to the products or services
sold. Operating expenses are expenses for sales, marketing overheads and marketing working
budget, research and development, general and administrative costs as well as depreciation of
non-production assets.
Operating Lease
Method of leasing assets over periods less than the expected lifetime of
those assets. An operating lease is accounted for by the lessee without showing an asset or
a liability
on his balance sheet. Periodic payments are accounted for by the lessee as operating
expenses
for the period.
Operating Margin
Operating profit as a percentage of net sales. Measure of a company’s profitability
after cost of sales and operating expenses. Best indicator of the profitability of operating
activities.
Operating margin = (operating profit / net sales) x 100.
Operating Overheads
Expenses which are not directly attributable to the products or
services
sold such as costs for sales, marketing overheads, logistics, research and development,
as well as general and administrative costs.
Operating Profit
Profit from operating activities after cost of sales and operating expenses.
Operating profit = gross profit + royalty and commission income – marketing working budget –
operating overheads.
Operating Working Capital
Company’s short-term disposable capital which is used to
finance
its day-to-day business. In comparison to working capital, operating working capital
does not include non-operational items such as cash, financial assets and taxes. see also
Working Capital
Operating working capital = accounts receivable + inventories – accounts payable.
Option
Financial instrument which ensures the right to purchase (call option) or to sell (put
option)
a particular asset (e.g. shares or foreign exchange) at a predetermined price (strike
price) on or before a specific date.
Order Backlogs
see Backlogs
Other Operating Expenses (and Income)
Operating expenses (and income) for sales,
marketing,
research and development, as well as for logistics and central finance and administration.
Also includes amortization of goodwill and trademarks.
Over-The-Counter Market (OTC Market)
When a traded stock is not listed on a stock
exchange.
In such cases, brokers negotiate directly with one another over computer networks
and by phone.
Own-Retail Activities
Sales directly generated through a store operated by a brand segment
within the adidas Group. Own retail includes adidas Concept Stores (Sport Performance and
Sport Style) and concession corners as well as factory outlets and e-commerce for the adidas,
Reebok and Rockport brands.
PGA Tour
Major US men’s professional golf tour, featuring 49 golf tournaments.
Price-Earnings Ratio (P/E Ratio)
A company’s share price divided by its current or future
diluted earnings per share. The P/E ratio is used by investors as a fundamental measure of the
attractiveness of a particular security versus other securities or the overall market. It is usually
more useful to compare P/E ratios of one company to other companies in a similar industry. In
general, a high P/E ratio suggests that investors are expecting higher earnings growth in the
future
compared to companies with a lower P/E.
Price Points
Specific selling prices, normally using “psychological” numbers, for example a
product price of USD 9.99 instead of USD 10.
Private Placement
Placement of securities directly to institutional investors, such as banks,
mutual funds, insurance companies, pension funds, and foundations.
Product Licensees
Companies that are authorized to use the name of a brand or company
to manufacture and distribute products. For adidas, these products primarily include sports
watches, sports eyewear, toiletries and perfume, for Reebok fitness equipment and for
TaylorMade-adidas Golf bags and gloves.
Promotion Partnerships
Partnerships with events, associations, leagues, clubs and individual
athletes. In exchange for the services of promoting the adidas Group, the party is provided
with cash and / or promotional material.
Promotional Expenditure
Expenses related to promotion partnerships.
Purchase Price Allocation (PPA)
Stipulated by IFRS regulations. Allocation of the purchase
price paid for an acquisition according to the fair values assigned to acquired assets and liabilities.
Record Date
Date by which a shareholder must own a company’s shares in order to be able to
register for participation in the Annual General Meeting of such company. According to German
law, the record date is twenty-one days before the Annual General Meeting.
Regions
The adidas Group segments its worldwide business into four regions: Europe, Asia,
North America and Latin America. Whereas North America and Latin America match the actual
geographical classification, Europe also includes Africa and the Middle East, and Asia additionally
comprises the Pacific region, Australia and New Zealand.
Retail Investor
Individual who purchases securities for him- / herself, as opposed to an
institutional
investor.
Return on Capital Employed (ROCE)
Measure of the returns that a company is realizing
from its capital.
ROCE = (income before taxes + financial result + extraordinary income) / (average of shareholders’
equity + minority interests + total net borrowings).
Return on Equity (ROE)
Indicator of company profitability related to the shareholders’ financing.
ROE = net income / shareholders’ equity.
Risk-Free Rate
Rate of return to be expected on a risk-less investment, e.g. federal bonds.
RSS (Really Simple Syndication)
Web feed format for delivering regularly changing web
content.
The format is used to allow people to stay informed by automatically retrieving the
latest
content from the website of choice.
Season
At the adidas Group, we typically design and produce two major collections per year –
a Fall / Winter and a Spring / Summer collection. Hence, we divide our business into a Fall / Winter
and a Spring / Summer season accordingly.
Second Tier Supplier
Also tier-two supplier. Supplier who provides the adidas Group with
materials and components to be used in the production of finished products, but does not manufacture
products.
Segment
Also Business Segment. Units within a company that have profit and loss responsibility.
The adidas Group is currently divided into four major business segments: adidas, Reebok,
TaylorMade-adidas Golf and HQ / Consolidation.
Segmental Reporting
Information regarding the financial position and results of operations
in individual brands (segments) and regions. This gives an indication of developments in the individual
segments and their contribution to the Group’s results.
Sell-Through
An indicator of how fast retailers are selling a particular product to the consumer.
Shareholder Value
A management concept that focuses strategic and operational decision-making
on steadily increasing a company’s value for shareholders.
Shop-in-Shop
adidas, Reebok or Rockport area within a larger store. The concept may be
operated
by the store or the adidas Group depending on individual arrangements. The goal of
this distribution method is to give consumers a similar experience to an own-retail environment
albeit on a smaller scale.
Signature Collection
Product collection which carries the name and / or visuals relating to
a top athlete, e.g. David Beckham football boot, Tracy McGrady basketball shoe, Sidney Crosby
hockey stick.
SKU (Stock Keping Unit)
A unique identification for end product that can be ordered from a supplier. At the adidas Group a specific article in a specific size and color is considered to be
an SKU.
Sourcing
Process of managing external suppliers in order to commercialize, produce and
deliver
final products to customers.
Sport Fusion
Footwear and apparel products mixing performance-oriented features and
casual
styles.
Sporting Goods Channel
Sports retail store, offering a very broad product range, which
usually covers apparel, footwear and hardware in a wide range of sports categories. Compared
to sport specialty shops, stores are bigger with approx. 40,000 to 50,000 square feet.
Sport Specialty
Retail shop, specializing in sports products only and offering a very deep
product range (often in a limited number of sports categories) rather than a broad one. The size
of these shops is typically about 2,500 to 10,000 square feet.
Stakeholders
All parties that have a direct or indirect interest in a company’s performance
and results. For the adidas Group, this includes credit providers, shareholders, consumers,
retailers,
distributors, licensees, supply chain business partners, employees, international
sports bodies, non-governmental organizations, the media, etc.
Supply Chain
Refers to the system and organization from product sourcing through to end
customer
delivery.
Swaps
A derivative in which two counter-parties agree to exchange one stream of cash flows
against another stream.
Synergies
Additional savings or revenue growth when one combined enterprise is created from
two or more separate parts.
Tax Rate
Indicates the tax rate paid by a company. Calculated by dividing taxes actually paid by
income before taxes.
TECHFIT™ Powerweb
Technology in adidas compression apparel which improves joint alignment
and muscle balance, the link between key muscle groups to maximize power generation.
Through strategically placed TPU (thermoplastic urethane) POWERBANDs, key body parts are
linked together, further enhancing posture and athletic performance.
THE PUMP™
Custom-fit footwear technology. The foot is surrounded with an adjustable, formfitting
air chamber. Inflating the chamber by pumping the Pump Ball causes it to form to the
shape of the foot.
Third Tier Supplier
Also tier-three supplier. Supplier who provides the adidas Group’s second
tier suppliers with raw material products (e.g. polymers, compounds) used in materials and
components. see also Second Tier Supplier
Top-Down, Bottom-Up
Specific concept for information and knowledge processing. Information
and empowerment of management decisions is delegated from top to bottom in a first step.
After going into more detail on the bottom level, the final information / decision is transported
back to the top.
TORSION® SYSTEM
Footwear technology comprising a lightweight arch support in the sole,
allowing
the fore- and rearfoot to move independently for better surface adaptation and stability.
UEFA EURO 2008™
European Football Championship, which will take place in Austria and
Switzerland from June 7 to 29, 2008.
VOC (Volatile Organic Compounds)
Solvents that can cause breathing and health problems.
VOC s are by-products of the shoe manufacturing process. Due to health concerns, the adidas
Group has set a clear goal to steadily reduce the usage of these compounds in the production
process.
Weighted Average Cost of Capital (WACC)
Calculation of the cost of capital according to
the debt / equity structure, utilizing a weighted average cost of capital (WACC) formula. The cost
of equity is typically computed utilizing a risk-free rate, market risk premium and a beta factor.
The cost of debt is calculated through the risk-free rate, credit spread and average tax rate.
see also Beta Factor and Market Risk Premium
World Class Buyer Program
Program launched in 2006, which aims to maximize purchasing
leverage across our brands. It comprises, for example, the consolidation of volumes
across our first and second tier suppliers as well as the adoption of best costing practices.
Working Capital
A company’s short-term disposable capital used to finance the day-to-day
operations.
see also Operating Working Capital
Working capital = total current assets – total current liabilities.
Working Capital Turnover
Shows how often a working capital item was used in and
replaced
by the generation of sales in the period under review. The ratio shows how long working
capital is tied up and thus is an indicator of the volume of capital needed to generate
sales. The higher the ratio, the more positive it is deemed to be.
Working capital turnover = net sales / working capital.
WTO (World Trade Organization)
International organization founded to supervise and
liberalize
international trade, located in Geneva, Switzerland.