Cisco Systems Financial Statements and Financial Ratios Analyzed

Cisco Systems Financial Statements and Financial Ratios Analyzed from 2015 to 2019

Expert Cisco Financial Report & Analysis by Paul Borosky, MBA.

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Hey All,

Thanks for visiting my Cisco Systems Financial Report page. On this page, you will be able to find preliminary information about Cisco current financial performance as well as some historical track records and trends.

For a more detailed examination of Cisco financial performance, please check out the “Financial Report”. In this report, written by myself, Paul Borosky, MBA., Doctoral Candidate, and published author, you will find:

Summarized income statement for the last 5 years.
Summarized balance sheet for the last 5 years.
Summary analysis by myself of the important income statement, balance sheet, and financial ratio trends and other happenings.
Five years’ worth of over twenty common financial ratios presented with formulas, calculations, and analysis tips for each ratio.
Line by line description, explanation, and analysis tip for most financial statement line items and financial ratios.
Professional financial analysis tips are provided in each section to help YOU conduct your OWN financial analysis!
Each section includes an “in other words” segment. This is where I use plain English to explain concepts.

Enjoy the preliminary information and for a more detailed analysis, buy the financial report!

Sincerely,

Paul, MBA.

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Sample Financial Report

Cisco Systems: Brief Summary

Cisco Systems (CSCO) headquarters is located in San Jose, California. The organization competes in the technology sector, specifically the communication equipment industry. At present, Cisco employs approximately 76,000 employees. Their main revenue generators would be the designing, manufacturing, and selling of Internet-based networking and other communication equipment.

From a financial perspective, Cisco Systems stock price ranges between $32.40 to $58.26 in the last 52 weeks. The company does pay out dividends, approximately 3.16% yield. Their market capitalization is $192.6 billion. Finally, the organization beta is .96, which indicates that the company’s risk as compared to the overall market is slightly lower.

Cisco Systems Financial Report Sources

“Cisco 2019 Company Analysis… For Beginners: Financial Statements and Financial Ratios: Defined, Discussed, and Analyzed for 5 Years” was written by, Paul Borosky, MBA. and owner of Quality Business Plan. In this report, I used Cisco 2018 10k, 2017 10k annual report, 2016 10k annual report, 2015 10k annual report, and 2019 10k annual report as the basis for information gathering.

Section 1: Cisco Income Statement Analyzed 2015 to 2019

In this section, I walk through a broad definition as to what an income statement is and why it is important. From this, I then discuss and define income statement line items, such as revenues, gross profits, etc. in detail. After each line item is defined and discussed, I finally offer a summary analysis of Cisco important income statement line item trends from 2015 to 2019, in most cases.

Cisco Systems Revenue Growth.

In 2015, Cisco Systems revenues ended the year at $49.1 billion. The company would slightly increase its revenues to $49.2 billion in 2016 only to fall in 2017 to $48 billion. Fortunately, though the company did increase its revenues for the last two years ending 2019 at approximately $51.9 billion. The anemic growth in the last five years should be worrisome for investors. A main reason why is that the company competes in the technology sector. To adequately compete, this requires continuous innovation, which it seems like Cisco is lacking. If the trend in 2019 continues, then it may indicate that the firm has improved its competitive nature. However, a fall in revenue in 2020 should indicate to investors that the organization has some cultural dysfunction that needs a deep cleaning.

Cisco Systems 2019 Income Statement
Column1	2019	2018	2017	2016	2015
Revenues	51,904	49,330	48,005	49,247	49,161
COGS	19,238	18,724	17,781	18,287	19,480
Gross Profit	32,666	30,606	30,224	30,960	29,681
SG&A	9,571	9,242	9,184	9,619	9,821
Depreciation	1,897	2,192	2,286	2,150	2,442
R & D	6,577	6,332	6,059	6,296	6,207
Other
Operating Expenses	18,447	18,297	18,251	18,300	18,911
EBIT	14,219	12,309	11,973	12,660	10,770
Other Income
Interest Expense	859	943	861	676	566
EBT	14,571	13,039	12,287	12,920	11,201
Taxes	2,950	12,929	2,678	2,181	2,220
Net Income	11,621	110	9,609	10,739	8,981

Section 2: Cisco Balance Sheet Analyzed from 2015 to 2019

For Cisco Systems balance sheet, I again go through each important line item from the balance sheet. In reviewing each line item, I will define their balance sheet line item, such as cash, property, plant and equipment, and liabilities between 2015 to 2019. Next, I then offer a summary analysis of their important balance sheet line items.

Cisco Systems Short-term Investments

Cisco Systems ended 2015 with approximately $53.5 billion in short-term investments. Their short-term investments would grow through 2017 ending the year with approximately 58.7 billion in short-term investments. However, in the next two years, the organization’s short-term investments would continuously fall ending 2019 with $21.6 billion in short-term investments. As a concern, a significant fall in short-term investments may indicate that the company is burning cash and needs to supplement its operations with short-term investments. However, the organization had increased its revenue substantially from 2018 to 2019. If this revenue increases again in 2019, then this funding may have been utilized for research and development, which would be a good thing. From an investor perspective, they should be looking real hard at 2020s financial statements for a better understanding of the companies trends in this area as well as revenues.

Cisco Systems 2019 Summary Balance Sheet
Column1	2019	2018	2017	2016	2015
Cash	11,750	8,934	11,708	7,631	6,877
Short Term Investment	21,663	37,614	58,784	58,125	53,539
Account Receivable	5,491	5,554	5,146	5,847	5,344
Inventory	1,383	1,846	1,616	1,217	1,627
Other
Current Assets	47,755	61,837	83,703	78,719	76,283
Net PPE	2,789	3,006	3,322	3,506	3,332
Goodwill	33,529	31,706	29,766	26,625	24,469
Other
Total Assets	97,793	108,784	129,818	121,652	113,481
Accounts Payable	2,059	1,904	1,385	1,056	1,104
Accrued Expense	3,221	2,986	2,895	2,951	3,049
Accrued Taxes	1,149	1,004	98	517	62
Notes Payable	10,191	5,238	7,992	4,160	3,897
LT Debt – Current
Other
Total Current Liabilities	31,712	27,035	27,583	24,911	23,623
LT Debt	14,475	20,331	25,725	24,483	21,457
Other
Total Liabilities	64,222	65,580	63,681	58,067	53,774
Common Stock	40,266	42,820	45,253	44,516	43,592
Treasury
Retained Earnings	(5,903)	1,233	20,838	19,396	16,045
Other
Total Equity	33,571	43,204	66,137	63,586	59,707
Total Equity & Liability	97,793	108,784	129,818	121,652	113,481

Section 3: Cisco Financial Ratios Analyzed from 2015 to 2019

For this section, I have chosen several different financial ratios to review for Cisco from 2015 to 2019. In reviewing each of their financial ratios, I first start with defining the financial ratio. Next, I supply the financial formula for calculating the specific ratio. Finally, I offer a brief analysis of their important Financial ratios.

Cisco Systems Current Ratio.

Cisco Systems ended 2015 with a current ratio of 3.23. The gold standard which indicates financial solvency for the next 12 months is 1.0. This indicates that the company had three times as much current assets as needed to ensure solvency. In my most humble of opinion, this indicates that the company’s executive team is mismanaging its current assets. A better strategy would be to either increase dividends to reduce their current asset position or utilize current assets in a more long-term manner like purchasing additional property, plant, equipment to help lay the foundation for future growth. Fortunately, in the next four years, the organization would take action to substantially reduce its current ratio position ending 2019 with the current ratio of 1.51.

Cisco Systems Total Asset Turnover.

Cisco Systems ended 2015 with a total asset turnover of .43. In the next two years, their total asset turnover would fall 2.37 in 2017. This indicates that the company is using its total assets in a less efficient manner to generate revenues year-over-year. In my opinion, this is a direct reflection as to lacks a daisy attitude by the executive team. Fortunately, the total asset turnover for Cisco would slightly improve over the next two years ended 2019 with .53. If this trend continues, this may indicate that the company has taken action to improve the usage of assets as a whole.

Cisco Systems Return on Assets.

In 2015, Cisco Systems ended the year with a return on asset ratio of 7.9%. In the next four years, their return on assets would fluctuate between .1% and 8.8%, ending 2019 with a return on assets of 11.88%. As an investor, when a company’s return on assets are over the board, this should throw up some serious red flags. Additional research needs to be done to determine why a significant fluctuation in this ratio has been done. Unfortunately, there is no real clear answer.

Cisco Systems Debt ratio.

Cisco Systems ended 2015 with the debt ratio of 18.9%. The company would increase its debt ratio to 20.1% in 2016. Fortunately, though in the next three years, the company would continuously reduce its debt ratio ending 2019 at 14.8%. Reducing their debt ratio also reduces the risk of bankruptcy and insolvency. From this perspective, kudos to Cisco’s executive team. However, this should also indicate to investors that Cisco is running out of ideas for investments. If they had innovative ideas, then the organization, from my opinion, would be tapping into debt to fund the future growth. There’s nothing better than making money on borrowed money. Unfortunately, this is not the case. A technology industry that is running out of ideas is worrisome.

Cisco Systems 2019 Liquidity Ratios
Ratios	2019	2018	2017	2016	2015
Current Ratio	1.51	2.29
Cash Ratio	0.37	0.33
Quick Ratio	1.46	2.22
Net Working Capital	12,195	10,440
Cisco Systems 2019 Asset Utilization
Ratios	2019	2018	2017	2016	2015
Total Asset Turnover	0.53	0.45
Fixed Asset Turnover	18.61	16.41
Days Sales Outstanding	38.61	41.09
Inventory Turnover	37.53	26.72
Accounts Receivable Turnover	9.45	8.88
Working Capital Turnover	4.26	4.73
AP Turnover	25.21	25.91
Average Days Inventory	26.24	35.99
Average Days Payable	39.07	37.12
Cash Conversion Cycle	25.79	39.96
Cisco Systems 2019 Profitability Ratios
Ratios	2019	2018	2017	2016	2015
Return on Assets	11.88%	0.10%
Return on Equity	34.62%	0.25%
Net Profit Margin	22.39%	0.22%
Gross Profit Margin	62.94%	62.04%
Operating Profit Margin	27.39%	24.95%
Basic Earning Power	14.54%	11.32%
ROCE	21.52%	15.06%
Capital Employed	66,081	81,749
ROIC	75.68%	0.77%
Cisco Systems 2019 Long-term Debt
Ratios	2019	2018	2017	2016	2015
Debt Ratio	14.80%	18.69%
Debt/Equity	43.12%	47.06%
Times Interest Earned	16.55	13.05