22 NORTHERN COLLEGE OF APPLIED ARTS AND TECHNOLOGY Notes to Financial Statements Years ended March 31, 2013 and March 31, 2012 18. Financial instruments (continued): (c) Equity risk: Equity risk is the uncertainty associated with the valuation of assets arising from changes in equity markets. The College is exposed to this risk through its equity holdings within its investment portfolio. (d) Liquidity risk: Liquidity risk is the risk t hat the College will not be able to meet all cash outflow obligations as they come due. The College mitigates this risk by monitoring cash activities and expected outflows thr ough extensive budgeting and maintaining investments that may be converted to cash in the near-term if unexpected cash outflows arise. Accounts payable are all current and the terms of the long-term debt are disclosed in note 7. There have been no significant changes from the pr evious year in the exposure to risk or policies, procedures and methods used to measure the risk. 19. Capital disclosures: The College considers its operating capital to c onsist of current portion of long-term debt, net assets invested in capital assets, internally re stricted net assets and unrestricted net assets. The College’s overall objective for its capital is to fund capital assets, future projects and ongoing operations. The College manages its capi tal by appropriating amounts to internally restricted net assets for anticipated future projects, contingencies and other capital requirements. The College also considers its endowments, as par t of its capital. The College’s objective with regards to endowments is to grow the endowment principal and maximize investment income to increase funding for student aid. The College may not incur a deficit without the appr oval of the Minister of Training, Colleges and Universities of Ontario. The College w ould be required to eliminate any accumulated deficit within a prescribed period of time. The College is not subject to any other ex ternally imposed capital requirements and its approach to capital management remains unchanged from the prior year.