Equity ratio climbs to 59%
The vigorous growth of liquid assets and net income combined to increase total assets by 13% to 6,326 million. Fixed assets decreased slightly (1%) to €1,609 million. Notable factors were the decline since the previous year in investment in property, plant, and equipment and in intangible assets. On the other hand, the higher market value of the Company’s marketable securities increased its financial assets. The equity-to-fixedassets ratio increased from 176% in 2002 to 231% in 2003.

Despite the difficult economic environment, SAP’s stringent receivables management processes once again reduced days’ sales outstanding (DSO). DSO measures the average time before accounts receivable are settled. In 2002, SAP reduced its DSO to 87 from 94 the previous year; in 2003, SAP reduced DSO a further 11 to 76. As a result, net accounts receivable were reduced 10% to €1,771 million in 2003.

SAP uses derivative financial instruments to manage foreign exchange risks and employee stock appreciation right plan expenses. The increasing market value of these derivatives led to an 88% rise in the Company’s other assets to €506 million. Even though net accounts receivable decreased from 2002, the Company achieved a 2% increase to €2,277 million in the accounts receivable and other assets total.

The main factor in the 29% increase in shareholders’ equity to €3,709 million was net income. As a result, the equity ratio (that is, the ratio between equity and total assets) increased eight percentage points to 59%. At 33%, the return on equity (that is, the ratio between net income and average equity) was higher than at any other time since fiscal year 1997.