Financial glossary

American Depository Receipt – ADR

A dollar-denominated US-registered security that makes it easier for US investors and employees to buy Sandvik shares.

Beta value

Beta value shows the volatility of the share price compared with the entire market.

Capital turnover

Invoiced sales divided by average total capital.

Convertible

A debenture/security interchangeable with a share.

Debt to equity

Total debt divided by shareholders' equity.

Direct return

Dividend divided by the quoted price at year-end.

Earnings

Net profit for the year.

Earnings after dilution

Net profit for the year after dilution for outstanding convertible program.

Earnings per share – EPS

Net profit for the year divided by the average number of shares outstanding during the year.

Equity ratio

Shareholders' equity and minorioty interests in relation to total capital.

Net debt to equity ratio

Interest bearing-liabilities (including provisions for pensions) less liquid assets divided by the total of shareholders' equity and minority interests.

Return on capital employed - ROCE

Profit after financial income and expenses, plus interest expenses, as a percentage of average total capital, less non-interest-bearing liabilities. Shows how productively a company is using its operating capital.

Return on equity – ROE

Consolidated net profit for the year as a percentage of average shareholders' equity during the year.

Payout ratio

Dividend divided by earnings. Shows how much of a company's profit is distributed as dividend.

P/E ratio

Price/Earnings ratio.
Shows a share's market price in proportion to its earnings per share. Calculated by dividing the share price by the reported or forecast annual earnings per share. For an investor this means that, if the P/E ratio is 10, the price is equivalent to ten years' earnings. In comparisons, it is best used for companies operating in the same field.