Chrysler 2007 Annual Report Download - page 305

Certain claims against Fiat S.p.A. for damages in relation to real estate properties sold in previous years are still pending. Given
this fact and the specific conditions of the related proceedings, the possible outcome of this situation cannot be reasonably
estimated and, therefore, the likelihood of any costs to be borne by the company cannot be determined.
27. Information on financial risks
The manner in which Fiat S.p.A. measures and manages financial risks are consistent with Group policy.
In particular, the categories of the major risks to which the company is exposed are set out below.
Credit risk
The maximum credit risk to which Fiat S.p.A. is theoretically exposed at December 31, 2007 is represented by the carrying amounts
stated for financial assets in the balance sheet and the nominal value of the guarantees provided as discussed in Note 26.
Amounts receivable at the balance sheet date are essentially due from Group companies, from the tax authorities and from T.A.V.
S.p.A. The risk on receivables from this latter company is limited to the margin earned by Fiat S.p.A. (of approximately 3.6%), since
a condition for the settlement of payables to consortium companies is the receipt of the amounts due from T.A.V. S.p.A.
Guarantees given are for the most part on behalf of Group companies.
There are no significant overdue balances.
Liquidity risk
Liquidity risk arises if the company is unable to obtain under economic conditions the funds needed to carry out its operations.
Fiat S.p.A. takes part in the Group’s centralised treasury management and as a result the liquidity risks to which it is exposed are
strictly connected with those to which the Fiat Group is exposed as a whole.
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.
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
tax 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.
Fiat S.p.A. Financial Statements at December 31, 2007 - Notes to the Financial Statements304