Novartis AG – Annual report – 31 December 2017
- Financial instruments – additional disclosures (extract)
Credit risks arise from the possibility that customers may not be able to settle their obligations as agreed. To manage this risk, the Group periodically assesses country and customer credit risk, assigns individual credit limits, and takes actions to mitigate credit risk where appropriate.
The Group’s largest customer accounted for approximately 17% of net sales, and the second-largest and third-largest customers accounted for 12% and 7% of net sales, respectively (2016: 16%, 12% and 6%, respectively; 2015: 14%, 11% and 5%, respectively). No other customer accounted for 5% or more of net sales in either year.
The highest amounts of trade receivables outstanding were for these same three customers and amounted to 14%, 9% and 5%, respectively, of the Group’s trade receivables at December 31, 2017 (2016: 14%, 9% and 6%, respectively). There is no other significant concentration of customer credit risk.