Merck 2008 Annual Report Download - page 134

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Liquidity risks
The liquidity risk, i.e. the risk that Merck cannot meet its financial obligations, is
limited by effective cash management and by establishing the required financial flex-
ibility. Apart from liquid assets of € 869.5 million, Merck has at its disposal a multi-
currency revolving credit line of € 2 billion to be used for business purposes with a
remaining term of six years as well as bilateral credit facilities of € 476.7 million.
There are no indications that the availability of credit lines already extended will be
restricted. Moreover, a commercial paper program with a volume of € 2 billion exists.
Liquidity risks are regularly monitored and reported to the management.
The following table presents the contractually set payments such as repayments and
interest on financial liabilities carried in the balance sheet and derivative financial
instruments with a negative market value:
€ million
Book value
Dec. 31,
2008
Cash Flows 2009
Cash Flows
2010 – 2014
Cash Flows
2015 – 2020
Interest Repayment Interest Repayment Interest Repayment
Debt securities and
commercial paper 997.7 42.5 – 76.2 1,000.0 – –
Bank loans and
o v e r d r a f t s 1 2 1 . 7 8 . 5 1 0 1 . 9 3 . 1 1 2 . 7 0 . 6 7 . 9
Other financial
liabilities 67.1 3.5 17.0 6.2 40.0 – 10.1
Miscellaneous other
liabilities 105.4–105.4––––
Financial leasing
liabilities 9.5 0.1 5.1 0.2 4.4 – –
Derivative financial
liabilities 44.9 1.7 40.9 4.9 3.4 – –
1,346.3 56.3 270.3 90.6 1,060.5 0.6 18.0
Credit risks
Merck is subject to a very low credit risk, i.e. the unexpected loss of payment funds
or income. On the one hand, financial contracts are only entered into with banks with
good ratings. On the other hand, the broad-based business structure of the Merck
Group means that there is no particular concentration of credit risks with respect to
customers or specific countries.
The credit risk with customers is continuously monitored by analyzing the age
structure of trade accounts receivable.
72 Income Statement
73 Balance Sheet
74 Segment Reporting
CONSOLIDATED FINANCIAL STATEMENTS OF THE MERCK GROUP
76 Cash Flow Statement
77 Free Cash Flow
77 Statement of Recognized
Income and Expense
78 Statement of Changes
in Net Equity including
Minority Interest
79 Notes
129