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Commercial/general glossary

Purchase of companies or parts of companies.

Sale of products to independent market: in spare part business parallel with or following series production.

Investigation procedures used to assess employed processes of the organization in terms of the fulfillment of requirements and guidelines.

Best practice
Method for success - Anglo-American business term. When a company acts according to best practice, it uses proven, costeffective processes, technical systems, and business processes, which make it an industrial model for others, at least in the major fields of activity.

BRIC countries
Acronym for Brazil, Russia, India, and China. These countries are generally regarded as major emerging growth markets.

In the consolidation process, intercompany holdings, receivables, liabilities, expenditure, income, and profits are eliminated in order to compile consolidated financial statements in line with the entity theory.

Consolidation group
Comprises the parent company, all subsidiaries and participations that must be considered in accordance with the regulations of the HGB on the date on which the consolidated financial statements are drawn up.

Corporate identity
The strategically planned and operationally implemented self-portrayal and behavior of a company, both internally and externally, based on an established corporate philosophy, a long-term corporate mission statement and a defined (ideal) image¬ówith the aim of achieving uniform internal and external representation in everything that the company does.

Cost of sales method
Type for the presentation of the profit and loss statement. In the cost of sales method, the sales are set against the manufacturing costs of the goods and services sold. Expenditures are mainly allocated to the corporate divisions' production, sales, and general administration.

Deferred tax assets
As a result of different accounting regulations for the tax and commercial balance sheets, the net income according to tax law and according to commercial law may differ. Because, in this case, the tax expense derived from the tax balance sheet considers the net income according to commercial law only to a limited extent, deferred tax assets are recognized in the balance sheet to compensate for differences.

Earnings before interest and taxes.

First consolidation/new consolidation
First consideration of Group member companies in the balance sheet of the absorbing subsidiary (usually if holding exceeds 50%).

Forward sourcing
Purchasing activities during the development process.

German Corporate Governance Code
Sets basic statutory standards for the management and for monitoring of German companies listed on the Stock Exchange (corporate governance) and comprises internationally and nationally recognized standards of good and responsible corporate governance.

Gross domestic product (GDP)
Measure of the economic performance of a national economy during a specified period. It measures the value of the goods and services (added value) produced within the country, except those treated as intermediate consumption for the production of other goods and services.

Joint venture
Business entity which is operated jointly by two or more companies on the basis of a cooperation agreement.

Key account structure
Type of sales organization geared toward purchasers or purchaser groups. The key account manager is available to key customers as a permanent contact.

Knowledge management
Consciously managing knowledge as a resource and using it in a targeted manner within the company.

Mercosur (Mercado comum do Cone Sul - Southern Common Market), is a trade network made up of Argentina, Brazil, Paraguay, and Uruguay, as well as the two new partner countries Bolivia and Chile, which is modeled on the European Union and officially came into effect on January 1, 1995.

Acronym for the free trade zone founded on January 1, 1994 - North American Free Trade Agreement. Its members are the United States of America, Canada, and Mexico.

Net financial situation
Net amount of liabilities to banks and monetary current assets.

Original Equipment, Original Equipment Manufacturer.

Original Equipment Services - original spare parts.

Organic growth
Part of the growth (of a company) resulting from internal forces and not from acquisitions.

Profit and loss statement
Method for determining a company's profit or loss. In accordance with the HGB, the possible methods are the cost of sales method and the total cost method.

Profit center
The profit center is an organizational subdivision for which the profit for the period is calculated separately. The profit centers usually operate as independent companies, with the aim of earning as high a profit as possible (profit responsibility).

Trade balance deficit
If a country imports more goods and services than it exports, the trade balance of a national economy shows a deficit.

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