BMW 2001 Annual Report Download - page 96

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At 31 December 2001, the negative effect of
the fair value measurement of financial instruments
recognised directly in equity amounted to euro 819
million (2000: euro 742 million) net of deferred taxes.
Of this amount euro 704 million (2000: euro 719
million) relates to cash flow hedges and euro 115
million (2000: euro 23 million) to available-for-sale
securities. During the year under report, negative
changes in fair values of euro 77 million (2000: posi-
tive changes in fair values of euro 244 million) were
recognised directly in equity. Of this amount euro 15
million (2000: euro 282 million) relate to positive ef-
fects from cash flow hedges and euro 92 million
(2000: euro 38 million) relate to negative effects
from available-for-sale securities.
In 2001, the negative fair values on financial in-
struments relating to hedged forecasted transac-
tions decreased by euro 428 million (2000: euro 571
million). This amount was included in accumulated
other equity and relates to underlying transactions
which were realised during the year. No losses and
gains on available-for-sale securities, recognised di-
rectly in equity, were realised as income or expense
in the fiscal years 2000 and 2001.
The cash flow statement shows how the cash and
cash equivalents of the BMW Group have changed
in the course of the year as a result of cash inflows
and cash outflows. In accordance with IAS 7 (Cash
Flow Statements), cash flows are classified into
cash flows from operating, investing and financing
activities.
Cash and cash equivalents included in the cash
flow statement comprise cash in hand, cheques, de-
posits at the Federal Bank and cash at bank, to the
extent that their maturity does not exceed three
months. The negative impact of changes in cash
Credit risk
The amount recognised in the balance sheet for
financial assets is, ignoring any collateral received,
the maximum credit risk in the case that counter-
parties are unable to fulfil their contractual obliga-
tions. In the case of all performance relationships
which underlie non-derivative financial instruments,
collateral is required, information on the credit-
standing of the counter-party obtained or historical
data based on the existing business relationship (i.e.
payment patterns to date) reviewed in order to min-
imise the credit risk. The nature and extent depends
on the type and amount of the relevant transaction.
Write-downs are recorded as soon as credit risks are
identified on individual financial assets. In the case
of derivative financial instruments, the Group is also
exposed to a credit risk which results from the non-
performance of contractual agreements on the part
of the contract party. This credit risk is minimised
by the fact that the Group only enters into such con-
tracts with parties of first-class credit standing. The
general credit risk on derivative financial instruments
utilised by the BMW Group is therefore not con-
sidered to be significant. A concentration of credit
risk with particular borrowers or groups of borrowers
has not been identified.
and cash equivalents due to the effect of exchange
rate fluctuations was euro 45 million (2000: euro
18 million).
The cash flows from investing and financial ac-
tivities are based on actual payments and receipts.
The cash flow from operating activities is computed
using the indirect method, starting from the net prof-
it of the Group. Under this method, changes in as-
sets and liabilities relating to operating activities are
adjusted for currency translation effects and
changes in the composition of the Group. The
changes in balance sheet positions shown in the
[37]Explanatory notes
to the cash flow
statement