Page 324 - TSMC 2020 Annual Report

financial related exposures. As of the end of the reporting period, the Company’s maximum credit risk exposure is equal to the carrying amount of financial assets.
Business related credit risk
The Company’s accounts receivable are from its customers worldwide. The majority of the Company’s outstanding accounts receivable are not covered by collaterals or guarantees. While the Company has procedures to monitor and manage credit risk exposure on accounts receivable, there is no assurance such procedures will effectively eliminate losses resulting from its credit risk. This risk is heightened during periods when economic conditions worsen.
As of December 31, 2020 and 2019, the Company’s ten largest customers accounted for 67% and 83% of accounts receivable, respectively. The Company considers the concentration of credit risk for the remaining accounts receivable not material.
Financial credit risk
The Company mitigates its financial credit risk by selecting counterparties with investment-grade credit ratings and by limiting the exposure to any individual counterparty. The Company regularly monitors and reviews the limit applied to counterparties and adjusts the limit according to market conditions and the credit standing of the counterparties.
e. Liquidity risk management
The objective of liquidity risk management is to ensure the Company has sufficient liquidity to fund its business operations over the next 12 months. The Company manages its liquidity risk by maintaining adequate cash and cash equivalent.
The table below summarizes the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments, including principal and interest.
December 31, 2020 Non-derivative financial liabilities
Short-term loans
Accounts payable (including related
parties)
Payables to contractors and
equipment suppliers
Accrued expenses and other current
liabilities
Bonds payable
Lease liabilities (including those
classified under accrued expenses
and other current liabilities) Guarantee deposits (including those classified under accrued expenses
and other current liabilities)
Derivative financial instruments
Less Than 1 Year
$ 175,658,226 43,256,260 156,342,457 56,090,322
4,423,599 1,539,173
53,157 437,363,194
1-3 Years
$- - - -
25,822,844 2,864,146
107,328 28,794,318
3-5 Years
$- - - -
30,134,920 2,763,636
151,745 33,050,301
- - -
$ 33,050,301
More Than 5 Years
$-
-
-
- 148,299,359
13,977,371
- 162,276,730
- - -
$ 162,276,730
Total
$ 175,658,226
43,256,260
156,342,457
56,090,322 208,680,722
21,144,326
312,230 661,484,543
144,697,981 (148,236,932) (3,538,951)
$ 657,945,592
Forward exchange contracts
Outflows 144,697,981 - Inflows (148,236,932) -
(3,538,951) - $ 433,824,243 $ 28,794,318
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