Chrysler 2013 Annual Report Download - page 324

323
Fiat S.p.A. Statutory
Financial Statements
at 31 December 2013
Liquidity risk
Liquidity risk arises if the Company is unable to obtain, at economically viable terms, the funding needed to carry out its activities.
Fiat S.p.A. participates in the Group’s centralized treasury management and, as a result, the liquidity risk to which it is exposed is strictly
correlated to that which the Fiat Group is exposed to as a whole.
The two principal factors determining the Group’s liquidity position are, on one side, the cash generated by or used in operating and investing
activities and, on the other, the maturity and renewal profile of debt and invested liquidity and prevailing market conditions.
The Group has adopted a series of policies and procedures to optimize management of financial resources and to reduce liquidity risk by:
centralizing management of collections and payments, where it may be economically beneficial in relation the legal and tax environment and
currency conditions in countries where it is present
maintaining an adequate level of available liquidity
diversifying sources of funding and maintaining a continuous and active presence in the capital markets
obtaining adequate credit lines, and
monitoring future liquidity based on corporate planning
Management believes that the funding currently available, in addition to cash generated by operating and financing activities, will enable the
Group to meet the requirements of its investing activities and working capital needs and to meet its scheduled debt repayment obligations.
Currency risk
At 31 December 2013, Fiat S.p.A. had no significant receivable, payable or derivative positions that were exposed to currency risk.
Interest rate risk
Fiat S.p.A. satisfies its financing requirements through the Group’s centralized treasury management system.
In particular:
current debt consists mainly of overdrafts on current accounts held with Fiat Finance S.p.A. and loans from Fiat Finance S.p.A., as well as
liabilities related to advances on the sale of receivables to banks (see Note 24)
non-current debt primarily consists of variable rate loans from Fiat Finance S.p.A. (see Note 20)
The cost of these positions is affected by changes in short-term interest rates. For short-term or variable rate transactions, a hypothetical,
immediate and adverse change of 10% in short-term interest rates would have an impact of approximately €1 million (no material effect at
31 December 2012).
Other risks relating to derivative financial instruments
At 31 December 2013, Fiat S.p.A. no longer held any financial derivatives.