Capital indicators
Annualized net sales
In computation of key ratios where capital is related to net sales, the latter are annualized and converted at year-end exchange rates and adjusted for acquired and divested operations.
Net assets
Total assets exclusive of liquid funds and interest-bearing financial receivables less operating liabilities, non-interest-bearing provisions and deferred tax liabilities.
Working capital
Current assets exclusive of liquid funds and interest-bearing financial receivables less operating liabilities and non-interestbearing provisions.
Liquid funds
Liquid funds consist of cash on hand, bank deposits, fair-value derivatives, prepaid interest expenses and accrued interest income and other short-term investments, of which the majority has original maturity of three months or less.
Interest-bearing liabilities
Interest-bearing liabilities consist of short- and long-term borrowings. Please refer to Note 17.
Total borrowings
Total borrowings consist of interest-bearing liabilities, fair-value derivatives, accrued interest expenses and prepaid interest income, and trade receivables with recourse.
Net liquidity
Liquid funds less short-term borrowings, fair-value derivatives, accrued interest expense and prepaid interest income and trade receivables with recourse. Please refer to Note 17.
Net borrowings
Total borrowings less liquid funds.
Net debt/equity ratio
Net borrowings in relation to equity.
Equity/assets ratio
Equity as a percentage of total assets less liquid funds.
Earnings per share
Profi t for the period divided by the average number of shares after buy-backs.
Other key ratios
Organic growth
Sales growth, adjusted for acquisitions, divestments and changes in exchange rates.
EBITDA margin
Operating income before depreciation and amortization expressed as a percentage of net sales.
Operating cash flow
Total cash flow from operations and investments, excluding acquisitions and divestment of operations.
Operating margin
Profi t for the period expressed as a percentage of net sales.
Return on equity
Net income expressed as a percentage of average equity.
Return on net assets
Operating income expressed as a percentage of average net assets.
Interest coverage ratio
Operating income plus interest income in relation to total interest expense.
Capital turnover rate
Net sales divided by average net assets.
Value creation
Value creation is the primary financial performance indicator for measuring and evaluating financial performance within the Group. The model links operating income and asset efficiency with the cost of the capital employed in operations. The model measures and evaluates profitability by region, business area, product line, or operation.
Value created is measured excluding items affecting comparability and defined as operating income less the weighted average cost of capital (WACC) on average net assets during a specific period. The cost of capital varies between different countries and business units due to country-specific factors such as interest rates, risk premiums, and tax rates.
A higher return on net assets than the weighted average cost of capital implies that the Group or the unit creates value.
Electrolux Value Creation model
Net sales
– Cost of goods sold
– Selling and administration expenses
+/– Other operating income and expenses
= Operating income, EBIT ¹)
– WACC x Average net assets ¹)
= Value creation
EBIT = Earnings before interest and taxes, excluding items affecting comparability.
WACC = Weighted Average Cost of Capital. The WACC rate before tax for 2008 is calculated at 12% compared to 12% for 2007.
1) Excluding items affecting comparability.
