CISCO SYSTEMS INC. JOHN NYAME ACG2021 FALL A Oct 10, 2005

Executive Summary Cisco systems was one of the few Information Technology companies to survive the 1999 dot.com bust unsoiled this is because unlike most young tech companies it has had solid management, good customer relations a solid revenue stream and a well defined purpose Cisco is continuing this tradition even to this day. Its profitability is increasing and will only increase as the internet grows in prominence Annual Report

Part A. Introduction John T. Chambers 170 West Tasman Drive San Jose, CA July 31, 2004 Telecommunications equipment ie. Routers WorldWide

Part A. Audit Report PriceWaterhouse Coopers LLC. The general outlook from the auditor was positive, Cisco has no debt, and strong revenues, although they lack the revenues that would justify their market capitalization, However profitability continues to grow and will do so for some time to come

Part A. Stock Market Information Most recent price of the company’s stock : Twelve month trading range of the company’s stock: – Dividend per share: 2.64 Date of the above information: July 2004 This is an investment I would HOLD

Part B. Industry Situation and Company Plans Cisco is a infrastructure player as such they are unlikely to bedazzle consumers, however they are well positioned to capitalize on the rapid growth in internet usage. Although there are new technologies and competitors that threaten this, Cisco’s relative position should ensure a bright future

Part C. Income Statement Cisco has a Multi-Step Income statement Cisco saw a nearly $1 billion increase in net income from the 03 to the 04 fiscal year.

Part C. Balance Sheet Cisco saw a healthy rise in Sales and only a slight increase in accounts payable, however its Cash position is extremely strong due to the value of its stock.

Part C. Statement of Cash Flows Cash flow from operations is more than net sales in both 03 and 04 Cisco’s Cash position has given it a large budget for R&D in which they are spending a great deal developing Asian research centers Overall cash has increased over the past two years

Part D. Accounting Policies What are the significant accounting policies, if any, relating to revenue recognition, cash, short-term investments, inventories, and property and equipment? List the topics of the notes to the financial statements.

Part E. Financial Analysis Liquidity Ratios For the past two years, calculate and comment on: Working Capital: $25 Billion Current Ratio: 1.6 Receivable turnover: N/A Average days’ sales uncollected: N/A Inventory turnover: N/A Average days’ inventory on hand: N/A

Part E. Financial Analysis Profitability Ratios For the past two years, calculate and comment on: Asset turnover : 0.6 Return on assets: 12.4% Return on equity: 17%

Part E. Financial Analysis Solvency Ratio Cisco has no long or short term debt due to its relative youth ( est. 1994) and it huge market capitalization which has ensured its cash position Debt to equity: N/A Equity $25 Billion Debt: $0

Part E. Financial Analysis Market Strength Ratios For the past two years, calculate and comment on: Price/earnings per share: 21.5 Dividend yield: 0