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Common financial terms such as turnover and EBITDA explained

By Esmee Blaazer


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Illustrative image. Photo by Monstera via Pexels

FashionUnited regularly reports on the financial performance of fashion companies, particularly when annual reports and half-year reports are published. These reports are also known as financial reports.

Financial reports provide a detailed overview of a company's financial performance over a specific period, including information on revenue, costs, profit, and loss. These figures, such as revenue, costs, profit, and loss, are also referred to as performance indicators or financial indicators.

In this article, we will explain the commonly used terms and concepts in detail.

You can choose to read the article from beginning to end (see content). Or click on a term from the glossary (glossary A-Z) to go directly to it.


  1. FAQ: Questions and answers
  2. Different financial reports and results are distinguished
  3. Explanation of the key financial indicators (and other terms you may come across)

Glossary (A-Z)

  • Business costs / expenses
  • Gross Merchandise Volume (GMV)
  • Gross Profit / Net Profit
  • EBIT
  • Consolidated results
  • Constant exchange rates / current exchange rates
  • Six month, Half Year, H1/H2 results
  • Full Year / FY results
  • Cashflow
  • Quarterly results, Q1/Q2/Q3/Q4)
  • Continued operations / discontinued operations
  • Monthly financial results
  • Underlying results
  • Turnover / Sales/ Revenue
  • Operating profit
  • Like-for-like
  • Overhead
  • ROI (Return on Investments)
  • Interim release
  • Preliminary results
  • Profit / Loss
  • Profit warning
  • Positive figures/negative figures or to be profitable/non profitable
  • 1. FAQ: Questions and answers

    Why do fashion companies publish financial reports such as annual and half-year reports?

    Major fashion companies publish their financial performance, such as annual and half-year results, to inform stakeholders about the health and performance of the company. These stakeholders may include shareholders, potential investors, creditors, regulators, and also the media (such as fashion magazine FashionUnited). Publicly traded companies are legally required to do so.

    These reports enable stakeholders to make decisions based on the information provided, such as regarding investments or strategy.

    In addition, the financial reports also provide insights into the company's future expectations (referred to as 'outlook') and allow anticipation of risks and opportunities.

    What does FashionUnited's coverage of achieved business results include? In news articles by FashionUnited about financial results, the performance indicators such as revenue and profit/loss are always covered.

    Our editors compare the achieved business results with the company's performance in the same period one year earlier. Has the revenue or profit increased or decreased compared to, for example, the previous fiscal year? Or has the company turned the loss into net profit? That is news.

    Additionally, information included or omitted in the report but deduced from the financial statement is incorporated into the news article.

    You can find the financial news articles in the business section of our website


    2. Which financial reports are published by fashion companies?

    Which financial reports are published by fashion companies? Various financial reports that are distinguished include:

    Full Year results

    Full Year financial releases, or FY for short. The full year results of a company indicate the financial performance of the company during a fiscal year, which typically lasts for twelve months. Note: A fiscal year does not necessarily align with a calendar year.

    Half year results

    Half year results or six-month financial releases. Half-year results refer to the financial performance of the fashion company during a six-month period. It can cover the first six months of the fiscal year (often referred to as H1) or the second six months of the fiscal year (often referred to as H2

    Quarterly results

    Quarterly results. Quarterly results are financial releases covering specific quarters of the fiscal year, often referred to as Q1, Q2, Q3, and Q4, representing the first, second, third, and fourth quarters, respectively.

    Monthly results

    Monthly results, also known as monthly financial releases are the financial results for each month.

    De tekst gaat verder onder de foto

    Illustrative image. Photo by Monstera via Pexels

    Preliminary results

    Preliminary results, also known as preliminary year-end figures, are based on an initial evaluation of the company's financial performance over a specific period. These results may still be adjusted when the final annual report is prepared and approved by the board of directors. Preliminary results are often released before the final annual report. It refers to the preliminary figures for the fiscal year.

    Interim release

    AnInterim release or interim financial statement is a report that usually provides a summary of the key financial results and events, used to inform stakeholders about the company's progress.

    Profit warning

    A profit warning is an announcement by a company that the expected profit for a specific period will be lower than previously predicted. It may be issued by a fashion company when it observes that sales or profit expectations are not being met, for example, due to changes in the market or economy, operational issues, or unforeseen costs.

    Consolidated results

    Consolidated results refer to a financial report that presents the combined results of a company, including all subsidiaries and associated companies. The report combines the financial data of all business units to provide a comprehensive view of the company's overall financial performance. Consolidated results are essential for companies operating in different countries or sectors and having multiple subsidiaries.

    Underlying results

    Underlying results, also known as underlying earnings, are financial results that reflect the company's operating performance without considering special or one-time items such as restructuring costs, taxes, depreciation, or asset sales. They represent the results derived from the core activities of the company and thus provide a more accurate representation of the company's actual performance. Companies often use underlying results to facilitate the comparison of their performance over different periods or with their competitors. It is also used to isolate the impact of exceptional events on the company's profitability.

    The text continues below the photo.

    Illustrative image. Photo by Monstera via Pexels

    3. Key financial indicators

    ...and other terms you may encounter in financial reports and our coverage.


    Revenue is also referred to as sales or turnover. It is the total amount of money a company earns from selling products or services during a specific period. It represents the company's income. Note: Costs and taxes are not deducted from revenue.

    An increase in revenue means that the company has earned more income from the sale of its products or services compared to a previous period. A decrease in revenue means that the company has earned less income compared to a previous period. Important to know: often, figures for a specific period, such as a year or half-year, are compared to the same period of the previous fiscal year. For example, the revenue for fiscal year 2023 is compared to the revenue for fiscal year 2022, and the revenue in the fourth quarter of 2023 is compared to the revenue in the fourth quarter of 2022, and so on.

    Gross Merchandise Volume (GMV)

    GMV stands for Gross Merchandise Volume and is a financial term used to measure how much money is earned from the sale of products or services through an online platform. It includes the total value of all sold items, including any fees or commissions charged by the company. It is an important metric for companies operating online marketplaces or e-commerce platforms.

    For example, if an e-commerce platform sells 100 euros worth of goods and charges a 10 percent commission, the GMV for that transaction is 110 euros.

    Is GMV the same as revenue?

    Although GMV and revenue have some overlap since they both measure the sales of goods or services, they are not the same financial terms. Revenue is the total amount a company has earned from the sale of goods or services, regardless of whether they occurred online or offline. It includes all income generated by a company from selling its products or services without deducting costs.

    Business costs / expenses

    Business costs or expenses in a financial report include all expenditures a company makes to conduct its operations. For example, wages of employees, building rent, and administrative costs. These costs are subtracted from revenue to determine gross profit and can also be used to assess the company's profitability. Business costs are essential to understand a company's cost structure and analyse its financial performance.

    Profit / Loss Profit

    Profit / Loss Profit, often referred to as earnings or profit in English, is the revenue minus all costs. It represents the money earned by a company. A fashion company can end up with money left over (profit) or be in the negative (loss). In the case of a loss, the costs are higher than the income.

    Gross profit vs. net profit

    Gross profit/gross loss is the difference between revenue and direct costs.

    Net profit/net loss is the amount remaining after deducting all costs and taxes.

    Operating profitt

    Operating profit, is the profit a company makes from its core activities, such as the sale of products or services, after deducting all operating costs but before deducting interest and taxes.

    An increase in profit means an increase in a company's profit compared to a previous period. A decrease in profit means that the company's profit has decreased compared to a previous period.

    Note: A loss, or a negative result as it is called, can be an indication of a weaker financial position of the company and an indication that measures need to be taken to improve performance. However, this is not always the case! Some fashion companies choose to incur losses in certain periods, for example, by investing in new products, technology, or marketing. This may lead to short-term losses but can create value for the company in the long run. It can, therefore, be a strategic choice.

    And what is the gross profit margin?

    The gross profit margin of a company is the percentage of revenue remaining after deducting the direct costs of producing the sold goods or services. The gross profit margin is calculated by dividing gross profit by revenue and then multiplying by 100 to get the percentage.

    A higher gross profit margin means that the company makes more profit on each unit of its products or services sold. This may indicate efficiency in producing products and controlling costs. A lower gross profit margin may indicate higher production costs and/or price pressure from competitors.


    What does EBITDA mean?

    EBITDA is short for Earnings Before Interest, Taxes, Depreciation, and Amortisation. It is a way to measure a company's operating profit, excluding financing costs, taxes, depreciation, and amortisation. It gives an indication of how much money a company earns by focusing only on the operational aspects of the business.


    What does EBIT mean? EBIT stands for Earnings Before Interest and Taxes and is a measure of the profit a company earns from its core activities before deducting interest costs and taxes. It gives an indication of how much money a company earns by focusing only on the operational aspects of the business and not on the impact of financing costs and taxes. EBIT is often used to compare and analyse the profitability of companies.

    Cash flow

    Cash flow(s) in a financial report simply means the amount of money flowing in and out of a company during a specific period. This money can come from various activities, such as the sale of products or services, investments in property or equipment, or obtaining loans or equity capital.

    It is essential to track cash flows as they show how much money the company has available to invest in future growth, repay debts, or distribute dividends to shareholders. By using this information, investors and analysts can gain a better understanding of the company's financial health and make decisions about investing in the company.


    What does ROI mean? ROI stands for Return on Investment. It is an indicator used to assess whether an investment was worthwhile or not.

    ROI is calculated by dividing the profit from the investment by the initial investment (i.e., the costs) and expressing it as a percent. For example, if a company invests 10,000 euros and makes a profit of 12,000 euros, the ROI is 20 percent (2,000 euros profit / 10,000 euros investment x 100 percent = 20 percent). The higher the percentage of ROI, the higher the profit generated. Generally, a positive ROI is considered a good sign for an investment. An ROI of 0 percent means that the investment has not yielded any profit or loss.

    ROI only considers financial aspects and does not take into account non-financial factors such as risks and time. Therefore, it is often just one of several factors considered when making an investment decision.

    Continued Operations / Discontinued Operations

    Continued operations and discontinued operations are English terms used in financial reporting to distinguish between a company's ongoing and non-continuing activities.

    Continued operations refer to the core activities of a company, i.e., the activities the company continues and from which it continues to generate income.

    Discontinued operations refer to the company's activities that have been sold, closed, or otherwise discontinued and no longer belong to the company's core activities. This can happen, for example, when a company decides to discontinue a product line or sell a subsidiary. You can also think of divisions or subsidiaries that are closed because they no longer fit the company's strategy.

    In the financial reports of a company, the results of both continued operations and discontinued operations are reported separately to provide a clear view of the company's performance. This is particularly important for investors and analysts when assessing future growth opportunities and risks.


    What does overhead mean?

    In a financial report of a fashion company, overhead refers to the indirect costs not directly related to the production of clothing or accessories. The costs include, for example, rent, salaries and wages of office staff, office supplies (computers, printers, etc.), insurance, marketing, and other general business expenses. Overhead costs are generally reported as a percentage of total costs and can impact the company's profitability.

    Constant Exchange Rates / Current Exchange Rates

    "Current exchange rates" and "constant exchange rates" refer to how exchange rates impact financial results.

    Constant exchange rates refer to financial data adjusted for the effects of exchange rate changes so that the figures can be compared with previous periods without taking into account currency fluctuations. This can help to get a better picture of a company's performance on a consistent basis, without external factors such as changes in exchange rates.

    Current exchange rates refer to financial data reported using the actual exchange rate at the time of the transaction or at the time of financial reporting. This can lead to fluctuations in reported figures due to changes in exchange rates between the transaction period and the reporting period.


    Like-for-like is a term used to measure and compare a company's financial performance with previous periods, specifically with exactly the same number of stores, businesses, and/or activities. The impact of, for example, new store openings or closures is not taken into account (or as they say, the impact is corrected). This way, companies can compare apples to apples, rather than apples to oranges. This occurs, for example, if a company/brand has been divested from a portfolio or if many stores have been opened or closed between periods.

    It is a way to determine whether changes in revenue, profitability, or other performance indicators are due to business activities or external factors.

    Positive and negative figures

    Illustrative image. Photo by Monstera via Pexels.


    • Knowledge of financial reporting from FashionUnited
    • Parts of this text were generated with an artificial intelligence (AI) tool and then edited.

    This article was originally published on FashionUnited.NL. Translation and editing from Dutch into English by Veerle Versteeg

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