Forecast the Income Statement, Balance Sheet, and Statement of Cash Flows Following are fiscal year financial statements of Cisco Systems Inc.

CISCO SYSTEMS INC.

Consolidated Statements of Operations Years Ended (in millions) July 30, 2016 July 25, 2015 Revenue Product . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $37,254 $37,750 Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,993 11,411 Total revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,247 49,161 Cost of sales Product . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,161 15,377 Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,126 4,103 Total cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,287 19,480 Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,960 29,681 Operating expenses Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,296 6,207 Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,619 9,821 General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,814 2,040 Amortization of purchased intangible assets . . . . . . . . . . . . . . . . . . . . . . . 303 359 Restructuring and other charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268 484 Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,300 18,911 Operating income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,660 10,770 Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,005 769 Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (676) (566)

Other income (loss), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (69) 228 Interest and other income (loss), net. . . . . . . . . . . . . . . . . . . . . . . . . . . . 260 431 Income before provision for income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 12,920 11,201 Provision for income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,181 2,220 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,739 $ 8,981 CISCO SYSTEMS INC.

Consolidated Balance Sheets In millions, except par value July 30, 2016 July 25, 2015 Assets Current assets Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,631 $ 6,877 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,125 53,539 Accounts receivable, net of allowance for doubtful accounts of $249 at July 30, 2016 and $302 at July 25, 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,847 5,344 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,217 1,627 Financing receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,272 4,491 Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,627 1,490 Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78,719 73,368 Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,506 3,332 Financing receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,158 3,858 Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,625 24,469 Purchased intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,501 2,376 Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,299 4,454 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,844 1,516 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $121,652 $113,373 In millions, except par value July 30, 2016 July 25, 2015 Liabilities and Equity Current liabilities Short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,160 $ 3,897 Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,056 1,104 Income taxes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 517 62 Accrued compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,951 3,049 Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,155 9,824 Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,072 5,476 Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,911 23,412 Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,483 21,457 Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 925 1,876 Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,317 5,359 Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,431 1,562 Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,067 53,666 Equity Cisco shareholders’ equity:
Preferred stock, no par value: 5 shares authorized; none issued and outstanding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —
Common stock and additional paid-in capital, $0.001 par value: 20,000 shares authorized;
5,029 and 5,085 shares issued and outstanding at July 30, 2016 and July 25, 2015, respectively . . . . . . . . . . . . . . . .
44,516 43,592 Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,396 16,045 Accumulated other comprehensive income (loss) . . . . . . . . . . . . . . . . . (326) 61 Total Cisco shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,586 59,698 Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1) 9 Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,585 59,707 Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $121,652 $113,373 Required Forecast Cisco’s fiscal 2017 income statement, balance sheet, and statement of cash flows; round forecasts to $ millions. (????int: Forecast total revenues by projecting a continuation of year-over-year percentage changes for each revenue category Cisco includes in its income statement [rounded to three decimal places. That is 0.0510034 would be rounded to 5.1%]).
???? Cisco’s long-term debt footnote reports the following current maturities of long-term debt.
Fiscal Years Ending ($ millions) 2017 2018 2019 Debt maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,150 $4,750 $5,250 ???? Cisco includes the current maturities with “Short-term debt” on its balance sheet.
???? In its 2016 financial statements, Cisco reports capital expenditures of $1,146 million, dividends of $4,750 million, depreciation of $1,847 million, which it includes in various income statement line items including cost of sales and general and administrative expense, and amortization of $303 million, which it reports separately. Use this information to forecast PPE and Purchased intangible assets.
Identify all financial statement relations estimated and assumptions made; estimate forecasted income statement and balance sheet relations as a percentage of total revenue, rounded to three decimal places (such as General and administrative/Total revenue is 0.03685 would be rounded to 3.7%). Assume no change for interest income and expense, goodwill, other long-term assets, investments, nonoperating income, common stock, accumulated other comprehensive income, and noncontrolling interests. What do the forecasts imply about the financing needs of Cisco?