200-day lineA moving average. A smoothed line derived from the average of the closing prices of a stock over the last 200 days. Used in the technical analysis of securities.



A purchase of all or part of a company so as to obtain ownership of its operating resources and/or to control its business.

Ad hoc statement

German companies listed on a stock exchange are required to inform the public without delay of any fact that might materially affect the price of their stock. These communications, known as “ad hoc” statements, must first be sent to the stock exchanges and BaFin (see below), and then be released to the market via communications media with a broad circulation. The intent is to prevent abuse of insider knowledge and to enhance the transparency of the market. Companies may be fined for failing to issue an ad hoc statement.


Acronym for American Depositary Receipt.
Depositary certificate traded on U.S. stock exchanges in place of a foreign share.
A significant benefit ADRs offer U.S. investors is their denomination in U.S. dollars. Dividends are also paid in U.S. dollars. Furthermore, a number of U.S. investors are only allowed to purchase shares of foreign companies listed on a U.S. stock exchange.


Abbreviation for American Depository Share.
ADSs are a U.S. dollar-denominated form of equity ownership in a non-U.S. company. They represent that company's shares and carry the rights attaching to them. An ADR is the physical certificate evidencing ownership of one or more ADSs. The terms ADR and ADS are often used interchangeably.


A way of reflecting, in a company’s balance sheet, the decline in the value of an asset over a specific period of time due to use. In general, “depreciation” is the term used for property, plant and equipment; “amortization” is used for intangible assets. There are two principal methods. With straight-line depreciation or amortization, the asset’s cost of acquisition or construction is spread uniformly over its anticipated useful life. With the declining-balance method, the carrying amount of an asset is reduced by larger increments at the beginning of the depreciation or amortization period, and by smaller increments later on.

Annual financial statements

The annual financial statements document a company’s financial results for the past fiscal year. In addition to a balance sheet and an income statement, a German corporation listed on a stock exchange must also release information such as a cash flow statement, a segment report, and a statement of changes in equity. The annual financial statements are prepared by the board of management, and are audited by a state-certified independent auditor.

Annual stockholders' meeting

The supreme governance body of a stock corporation. It is a meeting of all stockholders, convened at least once a year by the board of management. The annual stockholders’ meeting decides on the allocation of disposable net income, any changes in capital stock, amendments to the articles of incorporation, and other fundamental matters. It appoints the independent auditors and elects the stockholders’ representatives on the supervisory board. Only the annual stockholders’ meeting can ratify the actions of the board of management and supervisory board. The notice of the annual stockholders’ meeting includes a proposed agenda.
Articles of incorporation

Contractual basis of a stock corporation stating the company name, headquarters, business purpose, amount of capital stock and further basic rules and regulations.

Asset-backed securities (ABS)

ABS are (debt) securities collateralized by a pool of receivables.

Anleihe(engl.: Bond)
Schuldverschreibung, die das Recht auf Rückzahlung des Nennwerts zuzüglich einer Verzinsung verbrieft. Anleihen werden von der öffentlichen Hand, von Kreditinstituten oder Unternehmen „begeben“ und über Banken verkauft. Sie dienen dem Emittenten zur langfristigen Finanzierung durch Fremdkapital. Der Gesamtbetrag einer Anleihe teilt sich in kleinere Teilbeträge auf. Die wichtigsten Ausstattungsmerkmale einer Anleihe sind: Laufzeit, Zinszahlung und Art der Verzinsung.

Asset Backed Securities (ABS)

ABS sind Wertpapiere (Schuldverschreibungen), die durch einen Bestand an Forderungen abgesichert sind.



The “Bundesanstalt für Finanzdienstleistungsaufsicht,” Germany’s supervisory authority for financial services. It has headquarters in both Bonn and Frankfurt, and was formed by combining the former separate supervisory authorities for the lending, securities and insurance industries. Its mission is to safeguard the functionality, stability and integrity of the entire German financial system. It also has the jobs of protecting customers and investors and enforcing standards of conduct that will maintain investors’ confidence in the financial markets (market supervision).

Balance sheet

A balance sheet is a complete breakdown of a company’s assets and liabilities as of a given date, and serves as a measurement of the company’s ability to perform. It lines up the company’s assets, on one side, against its equity and liabilities, on the other. The balance sheet is included in the annual report, along with other statements like the income statement and the cash flow statement.

Bear market

A steep general decline in stock prices, usually over a longer period. Opposite of a bull market.

Bearer share

Transferable share certificate that does not specify the owner of the share. The bearer of the share is entitled to the rights and obligations stated on the share certificate. Bearer shares are the primary form of shares in Germany.
Antonym: Registered share


In business, a benchmark is a standard against which to evaluate success. Benchmarking is a method and principle of watching and learning from the best in the field.

Blue chip

A stock-market term for the stocks of large corporations with especially solid asset structures and earnings. The term originally comes from poker – blue poker chips have the highest value.

Board of management

Also known as managing board or executive board. One of the three governance bodies of a German stock corporation. Its main duties are the day to day management and representation of the company. A board of management may have one or more members, all of whom are appointed by the supervisory board. The supervisory board may appoint one member to chair the board of management. The chairman of the board of management holds a position similar to that of a chief executive officer in the United States.


A debt instrument that entitles the owner to receive repayment of the bond’s par value plus interest. Bonds may be issued by governments, banks or companies, and are sold through banks. They enable the bond’s issuer to obtain long-term financing by borrowing. The total amount of a bond issue may be divided into segments or “tranches.” The most important features of a bond are its maturity (the date when the issuer will repay the principal), its interest rate, and how its interest is paid.

Break-even point

The point at which expenses and income are equal. This is the threshold above which a business or transaction becomes profitable.

Bull market

A strong general rise in stock prices, usually over a longer period. Opposite of a bear market.


Capital expenditure

A long-term investment in operations to expand or improve a company’s production infrastructure. Net capital expenditures increase the company’s portfolio of capital equipment. Replacement expenditures provide replacements for goods consumed in the production process. Gross capital expenditures are the total of net and replacement expenditures.

Capital gains tax

In Germany, capital gains tax (“Kapitalertragsteuer”) is withheld from dividends and interest income. All investment income earned in Germany, and some investment income earned abroad, is subject to this tax. Basically the recipient of the investment income is liable for this tax, but it is withheld by the payer of the respective investment income or by a German bank on the taxpayer’s behalf, and is forwarded to the tax office.

Capital invested

Capital invested comprises the assets on which the company must obtain a return by generating an appropriate cash inflow; in some cases the cost of ultimately reproducing the assets must be earned in addition.

Capital reserves

Capital reserves: The paid-in surplus from the issuance of shares, i.e. the amount by which capital contributions exceed the nominal value of the capital stock.

Capital stock

The registered capital of a stock corporation. Numerically, it corresponds to the par value of all outstanding shares of stock. In the Bayer AG balance sheet, it is a component of stockholders’ equity. The capital stock of Bayer AG, amounting to Euro 2,116,986,388.48, is divided into 826,947,808 no-par registered shares.

Cash dividend

The portion of the dividend that is actually paid out to stockholders (after deducting corporate income tax) is called the cash dividend.

Cash flow

An indicator of a company’s financial strength and earnings power. It shows how much cash is brought in by operating activities to finance capital expenditures, repay debt and pay out dividends to stockholders. At Bayer, gross cash flow is calculated from the operating result (EBIT) plus depreciation and amortization, minus income taxes, minus gains/plus losses on retirements of noncurrent assets, plus/minus changes in pension provisions. Net cash flow is gross cash flow adjusted for changes in inventories and in trade accounts receivable and payable, as well as changes in other working capital.

Cash flow return on investment (CFROI)

The CFROI is the ratio between the gross cash flow in the period and the cost of reproducing depletable assets, divided by the capital invested. The CFROI is thus a measure of the return on capital employed in the period.

Cash flow statement

A cash flow statement shows a company’s cash disbursements and receipts, together with the net cash outflow or inflow, for a given accounting period (see cash flow).

Cash value added (CVA)

This is the difference between the gross cash flow and gross cash flow hurdle. It is therefore the amount by which the gross cash flow exceeds the return and reproduction requirements. If CVA is positive, the investors’ return and reproduction requirements have been satisfied and value has been created for the company.


Since 1993 the Deutsche Börse AG has published the Composite Dax (CDAX), a share price and performance index. CDAX indexes exist for 16 industry sectors.

Chart analysis

Method of analyzing and forecasting prices and interest rates in the financial markets on the basis of historical data.

Comprehensive Instruments

Comprehensive instruments are used to simplify the safekeeping and administration of securities. A multitude of individual instruments securitized in individual certificates is being pooled in a comprehensive instrument and excludes the delivery of individual papers.


The “consensus” is often considered equivalent to the “market’s expectations.” It is calculated as the average of analysts’ estimates for certain key figures of a company, such as its operating result or earnings per share.


(1) In the stock market, consolidation is a phase of stabilization in trading prices following phases of substantial fluctuations or jumps.
(2) In an industry, consolidation means a reduction in the number of companies, owing to either takeovers by competitors or bankruptcy.
(3) In financial reporting, consolidation means combining all the assets and all the equity and liabilities, as well as all the expenses and income, from the financial statements of the various legal entities – in other words, the parent company and its subsidiaries – in such a way as to show the results of the consolidated group as if it were a single entity.

Continuing operations

Revenue and earnings reporting for continuing operations pertains only to business operations that are expected to remain in the company’s portfolio for the foreseeable future.

Core earnings per share (core EPS)Core earnings per share comprise core net income divided by the weighted average number of issued ordinary shares. Core net income is computed from EBIT plus amortization and impairment losses on intangible assets and impairment losses on property, plant and equipment, plus special items (other than amortization and impairments), minus financial result, minus income taxes, minus tax effects related to amortization, impairments and special items, minus income after taxes attributable to non-controlling interest. Core earnings per share are not defined in the International Financial Reporting Standards. The company considers that this indicator gives readers a clearer picture of the results of operations and ensures greater comparability of data over time.
Corporate complianceCorporate compliance comprises the observance of statutory and company regulations on lawful and responsible conduct by the company, its employees, and its management and supervisory bodies.
Corporate GovernanceCorporate governance comprises the long-term management and oversight of the company in accordance with the principles of responsibility and transparency. The German Corporate Governance Code sets out basic principles for the management and oversight of listed companies.
Corporate identityStrategic concept for defining a company's identity and mission both internally and externally.
Credit default swaps (CDS)Credit default swaps are tradable insurance contracts used to hedge against the default of a borrower.
Credit ratingAn assessment of a debtor’s credit standing by rating agencies on the basis of such criteria as total debt, country risk, etc. Of the leading international agencies, the ratings issued by Standard & Poor’s range from AAA (top rating) to D (debtor in default); Moody’s ratings range from Aaa to C. Ratings help investors evaluate the credit risk inherent in fixed-income securities.
Currency riskThe potential decline in the value of foreign-currency bank deposits, receivables and securities due to exchange rate fluctuations.
Cusip no.Securities identification number in the United States.
CVAShort for cash value added: The amount by which the gross cash flow (GCF) exceeds the GCF hurdle, which is the minimum cash flow necessary to meet the return and reproduction requirements.



This index, developed in 1988 and encompassing Germany’s 30 largest-volume and most actively traded stocks, is the leading index of the German stock exchange company “Deutsche Börse.” A company’s stock is weighted according to the capital stock listed on the exchange. In addition to the DAX®, which also includes Bayer AG, there are a number of other German indexes, such as the MDAX® for companies whose order-book trading volume and market capitalization is less than for companies listed in the DAX®, and the TecDAX® for technology firms.

Delta cash value added (Delta CVA)

Delta CVA is the difference between the CVAs of two consecutive periods. A positive delta CVA shows that a unit has created more value or destroyed less value in the second period than in the first.


Synonym: custody account. Set up by credit institutions to administer securities for their customers. Every customer can deposit securities individually (under special wrapper) or in a collective security deposit bank. The latter option is common practice and more affordable.

Depreciation/ Amortization

A way of reflecting, in a company’s balance sheet, the decline in the value of an asset over a specific period of time due to use. In general, “depreciation” is the term used for property, plant and equipment; “amortization” is used for intangible assets. There are two principal methods. With straight-line depreciation or amortization, the asset’s cost of acquisition or construction is spread uniformly over its anticipated useful life. With the declining-balance method, the carrying amount of an asset is reduced by larger increments at the beginning of the depreciation or amortization period, and by smaller increments later on.

Directors' Dealings

The "Viertes Finanzmarktförderungsgesetz" became effective as of July 1, 2002. With the keyword "Directors' Dealings" the new notification and publication guidelines (§15a "Wertpapierhandelsgesetz") require an immediate publication of transactions in excess of Euro 25,000 involving securities of the own company untertaken by members of the board and members of the supervisory committee and their spouses, registered partners and first-grade relatives.

Discontinuing operations

Business operations already divested or earmarked for divestiture. Opposite of continuing operations.


Expanding a company's range of products and services to embrace new areas that are usually related to existing activities.

Divestment, divestiture

Sale of an asset. The opposite of a capital expenditure or acquisition.


The dividend is the portion of the profits paid out for each share of a stock corporation’s stock. The annual stockholders’ meeting decides on the amount of the dividend and when and how it will be paid.

Dow Jones EuroStoxx 50

An index of 50 representative stocks from countries of the European Monetary Union. Bayer AG is included in this index. There is also the Stoxx 50, which covers 50 selected blue chips from all over Europe. The “Stoxx Family” was developed by Stoxx Limited, a joint project of the German and Swiss stock exchanges and U.S. media firm Dow Jones, to provide a figure that would serve as a guide to investors in the European market.

Dow Jones Index

The Dow Jones Industrial Index (DJII) is the best-known index on the New York Stock Exchange. It is similar to the German DAX index in that it reflects the changes in the prices of the 30 most significant U.S. stocks. It has been calculated since 1897 by the Wall Street Journal, the financial newspaper published by Dow Jones & Company.

DVFA/SGAcronym for Deutsche Vereinigung für Finanzanalyse und Anlageberatung/Schmalenbach Gesellschaft (German Society of Investment Analysts / Schmalenbach Society) The German Society of Investment Analysts comprises approximately 950 capital market experts, aims to safeguard quality standards within capital markets and raise domestic and international investor confidence in the capital market. The Schmalenbach German Society of Business Management (Schmalenbachgesellschaft-Deutsche Gesellschaft für Betriebswirtschaft e.V., SG-DGfB e.V.) has a membership body of about 1,600 German economists and managers intent on promoting the exchange of ideas between microeconomic research and practice. DVFA and SG have developed joint standards for calculating year-end results (DVFA/SG earnings) and cash flow.


Earnings before interest and taxes (EBIT)

EBIT comprises earnings before financial result and taxes.

Earnings before interest, taxes, depreciation and amortization (EBITDA)

EBIT plus amortization and impairment losses on intangible assets and depreciation and impairment losses on property, plant and equipment, minus impairment loss reversals. EBITDA, EBITDA before special items and the underlying EBITDA margin are not defined in the International Financial Reporting Standards. The company considers EBITDA before special items to be a more suitable indicator of operating performance since it is not affected by depreciation, amortization, impairments or special items. By reporting this indicator, the company aims to give readers a clearer picture of the results of operations and ensure greater comparability of data over time.

Earnings per share (EPS)

EPS is calculated by dividing Group net income by the weighted ­average number of shares as defined in IAS 33.

EBITDA margin before special items

The EBITDA margin before special items is calculated by dividing EBITDA before special items by sales.

Economic cycle

The fluctuations in business activity within a given economy, measured by specific indicators. It is important for investors to observe the economic cycle because of its effect on share prices.

Electronic trading

Forwarding orders for the sale or purchase of securities through a central computer network. Whereas, in traditional trading, brokers are responsible for coordinating supply and demand, in electronic trading this task is performed by a central computer.

Emerging markets

Collective term for the (securities) markets of the young, developing economies of Latin America, Asia and Africa.

Employee stock

Stock issued to a company’s employees, usually on preferred terms. The goal is to give the employees an individual, direct stake in the company’s success, and also in its business risks.

EMTN and multi-currency EMTN program

The multi-currency European Medium Term Notes (EMTN) program is a documentation platform that enables Bayer to raise capital by quickly issuing debt on the global capital market. Securities issued under this program may be listed in Luxembourg if needed. Their maturities, currencies and conditions can be designed very flexibly.


Earnings Per Share (see above).


In contrast to liabilities – the other principal item on the same side of the balance sheet – equity is a combination of the funds raised by a company’s owners to finance it, and generated profits retained by the company.

Exceptional itemsNon-recurring items of an unusual nature.


Fiscal year

The period for which a company’s annual financial statements must be prepared. A fiscal year can never be more than twelve months.

Floor trading

A term for securities trading on an actual trading “floor” of a stock exchange building where the brokers are present in person, in contrast to computer trading.

Foreign exchange

Instruments employed in making payments between different countries or currency zones - such as paper currency, notes, cheques and electronic notifications of international debits and credits.

Form 20-F

Under U.S. law, foreign corporations listed on stock exchanges in the United States must issue a report each year on “Form 20-F,” containing a precise description of the company’s business condition and earnings position. Form 20-F is filed with the SEC (see below).

Free float

The percentage of a corporation’s stock that is not held by large, long-term stockholders.

FTSE 100 Index

The most important of the London Stock Exchange's share indexes. It includes the U.K.'s principal financial and industrial stocks, weighted according to their market capitalization.


Global commercial paper program

Commercial paper (CP) issued under Bayer’s program is a short-term, unsecured debt instrument normally issued at a discount and redeemed at nominal value. It is a flexible way of obtaining short-term funding on the capital market. The commercial paper program allows the company to issue commercial paper on both the U.S. and European markets.

Gross cash flow (GCF)

The gross cash flow comprises income after taxes, plus income taxes, plus financial result, minus income taxes paid or accrued, plus depreciation, amortization and impairment losses, minus impairment loss reversals, plus/minus changes in pension provisions, minus gains/plus losses on retirements of noncurrent assets, minus gains from the remeasurement of already held assets in step acquisitions. The change in pension provisions includes the elimination of non-cash components of EBIT. It also contains benefit payments during the year.

Gross cash flow hurdle

The GCF hurdle is the gross cash flow that needs to be generated to satisfy investors’ return and reproduction requirements.

Group, corporate group

A grouping of legally independent enterprises by way of intermeshing financial ownership (equity interests) to form a single economic unit under a single management.


Holding company

A holding company is an “umbrella” company that manages or administers a number of other companies in which it holds interests. The companies it manages are still legally independent, but as a rule a holding company has a controlling influence in all strategic issues and is responsible for such matters as the efficient management of the entire corporate group. A holding company itself does not sell goods or services. The Bayer Group is organized as a management holding company, three operating subgroups and three service companies.

Hybrid bond

A hybrid bond is a corporate bond with equity-equivalent properties, usually with either no maturity date or a very long maturity. Due to its subordination, issuer bankruptcy carries a lower likelihood of repayment than a normal bond.



The International Accounting Standards, adopted by the International Accounting Standards Board (IASB), an independent, privately financed committee founded in London in 1973. Bayer AG has been preparing its consolidated financial statements according to IAS since 1994. International Accounting Standards remain in effect under IFRS (International Financial Reporting Standards), whose application has been mandatory in Europe since 2005.


International Financial Reporting Standards: since 2005, the basis for preparing the consolidated financial statements of all European companies listed on a stock exchange. The objective of the underlying E.U. Regulation was to achieve better international coordination of reporting requirements.

Income before/after taxes

Reported profits for an accounting period before or after the deduction of income taxes. Income before taxes offers greater comparability with the results of previous years and with those of other companies.

Income statement

The income statement compares expenses and income for a given period, usually a quarter or a fiscal year. If total income exceeds total expenses, the company has earned a profit. If expenses exceed income, the company shows a loss.


A term for people who have special (“inside”) information about a business event, for example because of their professional position. Using that information for one’s own advantage in securities transactions is illegal.

Intraday trading

Building a position in a foreign currency or security etc. and disposing of it again the same day. Professional investors engage in intraday trading as a way of responding to changes in the values of securities during the trading day.


Making capital available on a long-term basis to maintain, expand and improve the economic means of production. Net investment is the addition to existing assets. Reinvestment is the replacement of assets depleted by the production process. Gross investment is the total of net investment and reinvestment.

Investor Relations

Investor relations (IR) is the deliberate, strategic fostering of the relationship between a company and the individual members of the financial community. The concept comprises all measures and decisions aimed at maintaining productive relations with existing stockholders and attracting new potential equity providers. They center on a comprehensive, consistent and timely exchange of information between the company and the financial markets. Important investor relations tools include investor conferences, corporate presentations to analysts and investors in the world's major financial centers ("road shows"), presentations on specialist topics or R&D, visits to the company by investors, one-on-one discussions with them and an IR website customized to the needs of the financial community.


short for the U.S. term "initial public offering", a corporation's first offering of stock to the public


Abbreviation for: "International securities identification number". Shares, bonds, investment certificates and option bonds listed on German stock exchanges are identified via a 6-digit international securities identification number (ISIN). Bayer's ISIN is DE000BAY0017

IssueThe release of new securities, especially stocks and bonds.
Issue pricePrice at which shares are issued by stock corporations within the scope of a capital increase or IPO.


Joint venture

A new company founded by two or more existing companies for the purpose of carrying out projects together – as a rule, with capital contributions from its owners.


Letter of intent

A nonbinding declaration of intention between a buyer and a seller. A letter of intent confirms that both sides are in negotiations to sign a contract. A letter of intent will often form the basis for that contract, but does not in itself establish any legal entitlements.


Comprise both current (short-term) debt (such as bank loans) and noncurrent (long-term) borrowings (such as bonds).

Life sciencesField of activities comprising particularly health care and nutrition; at Bayer this refers to the activities of the Bayer HealthCare and Bayer CropScience subgroups.
Liquidity(1) A company’s ability to pay its debts (bills, payments of principal, etc.) on time.
(2) In the case of securities, liquidity depends on the number of units of a security currently in circulation, and on the number of market participants who are willing to buy or sell such paper. If a security is liquid, supply and demand are great enough that a transaction – the purchase and sale of the security – can be arranged at any time.
ListingThe quoting of prices for a corporate security on a stock exchange. To be listed, a company must meet certain accounting, capitalization and disclosure requirements. The stock exchange’s admissions board decides whether a company can be listed for trading, upon application from a bank and after examining a “listing prospectus.”


M & A

Abbreviation for “mergers and acquisitions.”


A term for the difference between the cost and the market price of a commodity or service. “Margin” may also mean the difference between debit and credit interest. In the market practice called “arbitrage,” margin is the difference in price between two different trading forums.

Market capitalization

The market value of a company listed on a stock exchange. Market capitalization is calculated by multiplying the number of shares of a company’s stock times the stock’s current trading price.

Market quotation

Share price officially quoted on the stock exchange, determined by supply and demand and expressed per share unit. The stock market quotation depends, besides national economic factors, on share price determinants like a stock corporation's earnings situation and future perspectives.


Moody's is one of the two best-known and most important rating agencies; the other is Standard & Poor´s.

MSCI indexAn index published each trading day by the U.S. investment house Morgan Stanley Capital International. It measures the global development of the stock market. There are 7 international MSCI indexes, comprising a world index and 6 regional indexes, 20 national indexes and 38 global industry indexes. The base date of all the indexes is January 1, 1970. They are fully comparable and together make up the world index. They include 1,470 companies in 20 countries and represent about 60% of the market capitalization in those countries.



short for National Association of Securities Dealers´ Automated Quotations system. The NASDAQ is an electronic price information and trading system for stocks, especially of young companies, outside of the NYSE. Operated by the National Association of Securities Dealers, it has been steadily expanding since 1980.

Net cash flow

The net cash flow is the cash flow from operating activities as defined in IAS 7.

Net debt

Net debt is generally calculated by comparing debt against credit balances. At Bayer it is calculated as the total of all financial debt, less cash, cash equivalents, and receivables from financial derivative transactions (interest-rate and foreign-exchange hedges).

Net income (net loss)

Net income or loss is a corporation’s profit or loss after taxes and after minority stockholders’ interests. It is reported in the income statement.

No-par stock

Each share of a no-par stock represent a certain proportion (e.g. 1/1000) of a company's capital stock without having an actual nominal or "par" value. No-par stocks are very common in the United States, the United Kingdom and Canada. See "Stock types".

Non-operating result

The result of non-operating income and expense, comprising items such as interest, income from affiliated companies and write-downs/write-backs of investments, loans and securities. It is shown separately in the income statement below the operating result.


The abbreviation for the New York Stock Exchange, often referred to indirectly as Wall Street or the “Big Board.”



The right (not the obligation) to buy or sell stock within a certain period or on a certain date for a price agreed upon in advance (the “strike” price). The option has a notional value if the strike price is lower than the stock’s going trading price. If the going trading price is below the strike price, the option has no value.


Securities or investment funds that perform better than the market average are said to “outperform” the market.

Over the counter (OTC)

The trading of securities outside of an organized exchange. OTC transactions are nevertheless subject to securities trading laws. In the health care field, OTC medicines are those obtainable without a prescription.


Pension fund

A fund that grants members a legal right to receive pension payments out of it in the future


(1) The movements of a security’s value. Performance is assessed on the basis of price changes, dividend payments and preemptive (subscription) rights in the case of capital increases. It is stated as a percentage of a base value on a certain date.
(2) A company’s profitability or success potential.


A company’s pipeline comprises all products currently under development or awaiting market launch.


(1) Portfolio is a general term for a body of assets owned. It most commonly implies securities, but may also include real estate. The portfolio of an investment fund is the composition of its securities account, the combined total of its investment instruments (stocks, bonds, derivatives, and so forth).
(2) A company’s portfolio consists of its lines of business and its market position in those lines (market share, growth). A product portfolio may be the range of products a company offers, or even the characteristics of a specific product such as its earnings contribution, profitability and growth rates. The purpose of identifying a company’s portfolios is to derive strategic targets for business performance.


Purchase price allocation

Preemptive right/ Subscription right

A stockholder’s right to purchase new stock, proportionally to existing shareholdings, when the company increases its capital, so that the stockholder’s relative stake in the capital stock remains the same.

Price/cash flow ratio

The price/cash flow ratio is the ratio of the share price to gross cash flow per share. It shows how long it would take for the company’s cash flow to cover the share price.

Price/EPS ratio

This is the ratio of the current share price to earnings per share. A high price/EPS ratio indicates that the market assigns a high value to the stock in the expectation of future earnings growth.

Property, plant and equipment

The term for the physical assets of a company, including land, buildings, technical equipment and machinery, fixtures and furnishings, and so forth.


Provisions – sometimes known also as allowances or accruals – are recorded for liabilities, losses or expenses whose amounts or due dates are uncertain. An accounting item is formed for these potential amounts so that future expenditures can be allocated to the periods when they were actually incurred. Provisions are established for such charges as taxes and pensions.

Public relations (PR)

The provision of information by a company to the general public about the company, its markets, business trends etc. in order to maintain public confidence.


Quarterly report

An interim financial report issued by a corporation for each quarter of a year. Bayer AG includes these reports in its “Stockholders’ Newsletter” at the end of the first, second and third quarter.


R & D

Abbreviation for Research & Development. Activities connected with developing new products and services.

Registered share

Shares dedicated to a certain person that is registered in the companies registrar.


Equity above and beyond a company’s nominal liable capital. German law distinguishes between capital reserves (capital contributed to the company from outside) and retained earnings (reserves built up from earnings the company generates itself).

Retained earnings

Retained earnings: Net profits kept within a business after dividends have been paid.


The yield on capital employed, in percent. There are at least two ways of calculating returns:
(1) Dividend yield = ratio of dividend to the trading price of the stock;
(2) Return on sales = ratio of a company’s profits to sales revenues.

Return on capital employed

Acronym: ROCE. This figure measures the return on capital employed in percent. There are two ways of calculating returns:
a) dividend yield = ratio of dividend + tax credit to share purchase price, and
b) return on investment (ROI) = ratio of dividend + tax credit + share price fluctuations + subscription rights to share purchase price.

Return on equity

Acronym: ROE. Ratio of earnings (net income excluding minority interests) to net asset value. The ROE indicates a company's earnings situation and is comparable to interest on a financial investment.

Return on sales, operating margin

The ratio of a company's profits - either before or after taxes - to its sales volume for the same period, expressed as a percentage.


Acronym: REX-P. Index that mirrors the development of the German government bond market.


S&P 500

This index, developed by Standard & Poor´s Company in 1957, is based on the average performance of 500 widely held U.S. common stocks. The S&P 500 tracks 400 industrial, 40 financial, 40 utility and 20 transportation stocks. It is weighted according to the value of the shares of each company that are in circulation, with the 25 largest companies representing 60% of the index.

Safe Harbour

In the context of the publication of forward-looking information and projections, U.S. securities laws provide a "safe harbor" shielding companies from liability for forward-looking statements in some cases. Generally, a forward-looking statement will not give rise to liability if either

  • the statement is identified as a forward-looking statement and accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the forward-looking-statement; or
  • the complaining party cannot prove that the author of the statement had actual knowledge that the forward-looking statement was false or misleading.


Abbreviation for the U.S. Securities and Exchange Commission, the supervisory authority for securities trading in the United States.

A security is a certificate that represents an ownership right. The ownership right cannot be asserted without the security. Stocks, notes, mortgage bonds, corporate and government bonds, and investment certificates are all examples of securities.


A unit of stock, which is the equity ownership in a corporation. The bearers or owners of shares of stock - the shareholders or stockholders - are not creditors of the corporation but co-owners of it. They have certain rights, such as voting rights at the stockholders' meeting and subscription rights to new stock. They have no legal entitlement to a dividend, but if a dividend is declared it must be distributed among them in proportion to the number of shares held.

Share price/ Stock Price/ Trade Price

The price of a stock on a stock exchange, determined as a function of supply and demand.

Shareholder/ Stockholder valueA management concept that aims to maximize benefits to a company’s stockholders. The emphasis is on increasing enterprise value or the value of the stock.

Special item

One-time items of income or expense.


Transfer of the shares held by minority stockholders in a stock corporation to the majority stockholder in return for a compensation payment. In Germany, a majority stockholder with an interest of 95 percent can request a squeeze-out. When a stock corporation is merged with a parent stock corporation, a squeeze-out can take place if the majority interest is 90 percent or greater.

Stakeholder value

A management approach that aims to generate value for everyone affected by a company’s policies – including the employees and society in general. The stakeholder value approach acknowledges the concern that if management adopts a one-sided focus on building value for stockholders only, it may in fact undermine the real economic basis for success. For example, a short-term focus on the stock’s trading price might jeopardize employees’ long-term confidence in management. However, stockholder value and stakeholder value do not necessarily conflict with one another.

Standard & Poors

Standard & Poor's is one of the two best-known and most important rating agencies; the other is Moody´s.


In Germany, two types of companies issue stock: the stock corporation, or “Aktiengesellschaft” (abbreviated AG) and the “partnership limited by shares,” or “Kommanditgesellschaft auf Aktien” (abbreviated KGaA). Stock is divided into individual units called “shares.” The bearer or owner of a share of stock (called a shareholder or stockholder) owns a portion of the company’s share capital or “capital stock,” defined either as a percentage of that capital (a “theoretical” or “notional” value) or as a specific amount stated on the face of the stock certificate (a “par” value). Stockholders have a number of fundamental rights, including the right to participate and vote at stockholders’ meetings, the right to receive a portion of the company’s profits (a “dividend”), and the first right of refusal (known as a preemptive right or subscription right) if the company issues new stock.

Stock analysis

The study of share performance for the purpose of making long- or short-term investments. The analyst applies specific criteria in an attempt to predict future performance on the basis of past and present data. While fundamental analysis focuses on the financial data relating to the company itself and the markets in which it operates, technical analysis is concerned mainly with trends in the stock price and turnover. The principal stages in stock analysis are generally considered to be:
1. the actual analysis of the relevant data
2. the prediction of future profitability
3. the valuation of the stock

Stock corporation

A company whose stock is divided up into individual shares. Stock corporations often have a great many stockholders, many of whom may hold only small stakes. Such companies are said to be “widely held”. Each stockholder’s liability is limited to the value of the stock he or she owns. If a stock corporation is listed on a stock exchange, its stockholders can sell their shares on the exchange whenever they like, by way of a bank. German stock corporations have three principal governance bodies: the board of management, the supervisory board, and the annual stockholders’ meeting. To protect stockholders’ interests, German stock corporations must meet certain disclosure requirements. For example, they must publish their financial statements each year and announce business events that may have a material effect on the price of their stock.

Stock index

Stock indexes are used to measure and report changes in representative groups of stocks. The stocks included in each index are weighted according to certain criteria. Share price indexes (such as the FAZ Index) only reflect price trends, while performance indexes (such as the DAX) also take dividends and rights issues into account. Performance indexes therefore reflect the change in the overall value of the included stocks. The performances of the individual stocks in an index are often judged by comparing them to that of the index.

Stock marketThe market for securities, currencies, commodities and derivatives. The market is embodied in individual institutions known as exchanges. The world’s largest stock exchange is the New York Stock Exchange on Wall Street. In Germany, the highest volume of trading takes place in Frankfurt, but there are also regional stock exchanges in Düsseldorf, Stuttgart, Hamburg, Hanover, Berlin and Bremen. For years, conventional floor trading has been losing ground to electronic trading systems like the Frankfurt Stock Exchange’s XETRA.
Stock price/ Share price/ Trade priceThe price of a stock on a stock exchange, determined as a function of supply and demand.
Stock typesGerman stocks are generally categorized on the basis of several criteria:
(1) According to how the company’s capital stock is divided up:
a) Shares with a specific par value
b) “No-par” shares worth a certain fraction (such as 1/1000) of the capital stock (a theoretical or “notional” value).
(2) According to how ownership can be transferred:
a) “Bearer” shares may be transferred by a simple agreement and transfer of ownership.
b) “Registered” shares are recorded in the company’s register of stockholders, and their sale must be memorialized with a transfer notation.
c) “Restricted” registered shares cannot be transferred without the consent of the company’s board of management.
(3) According to the rights associated with the stock:
a) “Common” stock endows the owner with all rights as provided under Germany’s Stock Corporation Act (the “Aktiengesetz”).
b) “Preferred” stock usually does not entitle the owner to voting rights, but does entitle the stockholder to higher dividends or other preferential rights.
The capital stock of Bayer AG is represented by common stock only. All shares are no-par bearer shares.
Stockholder/ Shareholder valueA management concept that aims to maximize benefits to a company’s stockholders. The emphasis is on increasing enterprise value or the value of the stock.
Stockholders' NewsletterA publication, normally issued three times a year, in which Bayer provides an interim report on the Group’s business performance for the first, second and third quarter, respectively, together with a selection of topical news items about corporate activities. In spring of the following year the company then issues the Annual Report for the entire fiscal year.
Stockholders´ equityContrary to outside capital, shareholders' equity comprises funds raised by company owners for financing purposes or funds which remain in the company as income.
Subscription right/ Preemptive rightA stockholder’s right to purchase new stock, proportionally to existing shareholdings, when the company increases its capital, so that the stockholder’s relative stake in the capital stock remains the same.
Supervisory boardTogether with the board of management and the annual stockholders’ meeting, the supervisory board is one of the three legally required governance bodies of a German stock corporation. Its duties include overseeing the company’s management. A person cannot be a member of both the supervisory board and the board of management. Members of the supervisory board need not be stockholders of the corporation they supervise. The size of the supervisory board is defined by law and depends on the number of employees. Half of the 20 members of Bayer’s supervisory board are elected by the stockholders, and half are elected by the employees. The stockholder representatives are elected by the annual stockholders’ meeting, while the employees elect their representatives indirectly through electors.
Syndicated credit facilityCredit line agreed with a group of banks. Generally used for ­extensive financing requirements, such as when making an acquisition, to increase the available liquidity reserves or as security for the issuance of debt instruments. The credit facility can be utilized and repaid flexibly, ­either in full or in portions, ­during its term.
SynergySynergy is the positive effect that results from the combining of two companies or corporate units or from collaboration between them.





A portion of a securities issue that is carried out not all at once, but in several segments at different dates, and possibly at different interest rates or – in the case of international bonds – in different currencies.



The abbreviation for United States Generally Accepted Accounting Principles. The financial reporting standards used in the United States.


Venture Capital

Equity provided by specialized venture capital companies or funds to start-up companies, e.g. in high-tech sectors, that are unable to finance their own growth.


A measure of the relative extent of fluctuation of stock prices. If a stock’s price fluctuates widely, the stock is said to be very volatile. Higher volatility means a higher risk for investors.

Voting right

Right conferred upon shareholders to participate in decisions at the shareholders' meeting (usually one vote per share). Every shareholder can transfer his or her voting right to his or her security deposit bank or another shareholder-meeting participant per proxy.


Wall Street

see NYSE


A warrant documents the right, but not the obligation, to buy (call option) or sell (put option) certain underlying securities (stocks, bonds, etc.) on terms agreed upon in advance.

Weighted average cost of capital (WACC)

The weighted average cost of capital (WACC) represents the return expected by investors on the capital invested in the company. It is computed as a weighted average of the cost of equity and debt. The cost of equity is derived from capital market information and represents the return expected by stockholders, while the cost of debt represents the conditions at which the company can borrow money over the long term.

Working capital

Working capital is the difference between short-term current assets and short-term liabilities. It is calculated by deducting short-term liabilities from current assets. In financial accounting, the change in working capital is one of the variables used to assess a company’s financial health. The objective of working capital management is to reduce working capital by minimizing the “financing gap” caused by the time lapse between the disbursement of funds (= payment for necessary raw materials) and the receipt of funds for the finished product.


Write-downs are non-scheduled, downward valuation adjustments made to reflect unforeseen declines in the value of assets. Depreciation and amortization, on the other hand, are scheduled adjustments.



Acronym for Exchange Electronic Trading, a computerized securities trading system. The 30 DAX blue chips, the 70 MDAX shares, other select stock, equity warrants and a number of government bonds are traded on Xetra. Xetra replaced the former IBIS system for the German equity market on November 28, 1997. The new system is technologically more advanced and provides additional features such as opening and closing quotations.

Last updated: January 30, 2014 Copyright © Bayer AG