Nikon 2015 Annual Report Download - page 66

64 NIKON REPORT 2015
(c) Fair Values of Financial Instruments
Carrying amounts, fair values and the differences between carrying amounts and fair values as of March 31, 2014 and 2015 were as follows.
The accounts for which fair value is deemed to be extremely difcult to calculate are not included below:
Millions of Yen
March 31, 2014 Carrying Amount Fair Value
Unrealized
Gain / Loss
Cash and cash equivalents ¥221,368 ¥221,368
Notes and accounts receivable—trade 124,474 124,474
Investment securities 59,213 59,213
In vestments in and advances to
unconsolidated subsidiaries and
associated companies 232 867 ¥ 635
Total ¥405,287 ¥405,922 ¥ 635
Notes and accounts payable—trade ¥118,842 ¥118,842
Short-term borrowings 14,511 14,511
Accrued expenses 52,272 52,272
Income taxes payable 4,449 4,449
Bonds 60,000 61,218 ¥(1,218)
Long-term loans 49,600 48,989 611
Derivatives (2,572) (2,572)
Total ¥297,102 ¥297,709 ¥ (607)
14. Financial Instruments and Related Disclosures
(a) Group Policy for Financial Instruments
The Group restricts fund management to short-term deposits, and
funding is procured mainly through bank loans and bond issuance.
Derivatives are used, not for speculative purposes, but to hedge for-
eign exchange risk and interest rate exposures.
(b) Nature and Extent of Risks Arising from Financial
Instruments and Risk Management for Financial Instruments
Receivables, such as trade notes and trade accounts, are exposed to
customer credit risk. The Group manages its credit risk from receiv-
ables on the basis of internal guidelines which include monitoring
of payment terms and balances of major customers by each busi-
ness administration department to identify the default risk of cus-
tomers at an early stage. Although receivables in foreign currencies
due to global operations are exposed to the market risk of uctua-
tion in foreign currency exchange rates, the position net of payables
in foreign currencies is hedged, principally by using forward foreign
currency contracts.
Investment securities are exposed to the risk of market price uc-
tuations but are managed by monitoring market values and nancial
position of issuers on a regular basis. In addition, securities other
than held-to-maturity securities are continually reviewed, taking into
account the relationship between the Group and trading partners.
Payment terms of payables, such as trade notes and trade
accounts, are less than one year. Although payables in foreign cur-
rencies, which involve the import of raw materials, are exposed to
the market risk of uctuation in foreign currency exchange rates,
those risks are netted against the balance of receivables denomi-
nated in the same foreign currency as noted above.
Short-term borrowings are mainly related to working capital, and
long-term debt is related primarily to working capital and capital
investment. Although debts of variable interest rates are exposed to
market risks from changes in variable interest rates, some long-term
debts among those risks are mitigated by using derivatives of inter-
est rate swaps to reduce the risk of uctuations in interest expenses
and to adjust the xed interest. Please see “Summary of Signicant
Accounting Policies, Derivatives and Hedging Activities” for more
details about hedging.
Derivative transactions entered into by the Group have been
made in accordance with internal policies that regulate the authori-
zation and credit limit amount. The counterparties to the Group’s
derivative contracts are limited to major international nancial insti-
tutions to reduce credit risk.
Accounts payables and debts are exposed to liquidity risk. The
Group manages its liquidity risk by contracting committed lines of
credit.
Notes to Consolidated Financial Statements