Casio 2011 Annual Report Download - page 31

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Annual Report 2011
5. Inventories
Inventories at March 31, 2011 and 2010 consisted of the following:
Millions of Yen
Thousands of
U.S. Dollars
2011 2010 2011
Finished goods ................................................................................................... ¥31,586 ¥32,794 $380,554
Work in process ................................................................................................. 5,147 5,700 62,012
Raw materials and supplies ................................................................................ 8,694 12,128 104,747
Total ............................................................................................................. ¥45,427 ¥50,622 $547,313
6. Fair Value of Financial Instruments
Effective from the year ended March 31, 2010, the Company adopted ASBJ Statement No. 10, “Accounting Standard for Financial
Instruments” and ASBJ Guidance No. 19, “Guidance on Disclosures about Fair Value of Financial Instruments” revised by the
Accounting Standards Board of Japan on March 10, 2008, respectively. Information on financial instruments for the years ended
March 31, 2011 and 2010 required pursuant to the revised accounting standards are as follows:
(1) Qualitative information on financial instruments
1) Policies for using financial instruments
The Group invests surplus funds in highly secure financial assets, and funds required for working capital and capital investments
are raised through the issuance of bonds or loans from financial institutions such as banks. Derivatives are used to avoid the risks
described hereinafter and no speculative transactions are entered.
2) Details of financial instruments used and risks involved, and how they are managed
Notes and accounts receivable-trade are exposed to customers’ credit risk. To minimize that risk, the Group periodically monitors
the due date and the balance of the accounts.
Short-term investment securities and investment securities are primarily highly secure and highly-rated bonds and include shares
in companies with which the Group has business relations, and are exposed to market price fluctuation risk. The Group periodically
monitors the market price and reviews the status of these holdings.
Notes and accounts payable-trade and accounts payable-other have the due date of within one year.
Operating payables, loans payable, and bonds payable are subject to liquidity risk (the risk of an inability to pay by the due
date). However, the Group manages liquidity risk by maintaining short-term liquidity in excess of a certain level of consolidated sales
or by other means.
The Group uses derivative transactions of forward currency exchange contracts to hedge currency fluctuation risks arising from
assets and liabilities denominated in foreign currencies, as well as interest rate swap contracts to fix the cash flows associated with
loans payable and bonds payable or to offset market fluctuation risks. The Group utilizes and manages derivative transactions
following the internal regulation for them, which stipulates policy, objective, scope, organization, procedures and financial
institutions to deal with, and has an implementation and reporting system for derivative transactions reflecting proper internal
control functions.
3) Supplemental information on fair values
The fair value of financial instruments is calculated based on quoted market price or, in case where there is no market price, by
making a reasonable estimation. Because the preconditions applied include a floating element, estimation of fair value may vary.
The contracted amounts, as presented in Note 8 “Derivative Transactions,” do not reflect market risk.