Chrysler 2007 Annual Report Download - page 190

Liquidity risk
Liquidity risk arises if the Group is unable to obtain under economic conditions the funds needed to carry out its operations.
The two main factors that determine the Group’s liquidity situation are on one side the funds generated by or used in operating
and investing activities and on the other the debt lending period and its renewal features or the liquidity of the funds employed
and market terms and conditions.
As described in the Risk management section, the Group has adopted a series of policies and procedures whose purpose is to
optimise the management of funds and to reduce the liquidity risk, as follows:
■centralising the management of receipts and payments, where it may be economical in the context of the local civil, currency and
fiscal regulations of the countries in which the Group is present;
■maintaining an adequate level of available liquidity;
■diversifying the means by which funds are obtained and maintaining a continuous and active presence on the capital markets;
■obtaining adequate credit lines; and
■monitoring future liquidity on the basis of business planning.
Details as to the repayment structure of the Group’s financial assets and debt are provided in Notes 19 and 28, which are entitled
respectively Current receivables and Debt.
Management believes that the funds and credit lines currently available, in addition to those funds that will be generated from
operating and funding activities, will enable the Group to satisfy its requirements resulting from its investing activities and its
working capital needs and to fulfil its obligations to repay its debts at their natural due date.
Currency risk
The group is exposed to risk resulting from changes in exchange rates, which can affect its result and its equity. In particular:
■Where a Group company incurs costs in a currency different from that of its revenues, any change in exchange rates can affect
the operating result of that company. In 2007, the total trade flows exposed to currency risk amounted to the equivalent of 14% of
the Group’s turnover (13% in 2006). The principal exchange rates to which the Group is exposed are the following:
– EUR/USD, relating to sales in dollars made by Italian companies (in particular Ferrari and Maserati) to the North American market
and to other markets in which the dollar is the trading currency, and to the production and purchases of the Agricultural and
Construction equipment Sector in the Euro area;
– EUR/GBP, principally in relation to sales by Fiat Group Automobiles and Iveco on the UK market;
– EUR/PLN, relating to local costs incurred in Poland regarding products sold in the Euro area;
– USD/BRL and EUR/BRL, relating to Brazilian manufacturing operations and the related import and export flows, for which the
company is a net exporter in US dollars.
Fiat Group Consolidated Financial Statements at December 31, 2007 - Notes 189