• Cisco Systems, Inc. incurred $500 million in foreign exchange losses due to currency fluctuations impacting its international operations. The company provided the following financial data:
  • Foreign Exchange Losses: $500 million
  • Total Revenue: $50 billion
  • Operating Expenses: $35 billion
  • Net Income: $8 billion

• Requirements:
  1. Calculate Cisco's net income after accounting for the foreign exchange losses.
  2. Prepare an income statement showing the impact of foreign exchange losses on operating income.
  3. Analyze Cisco's operating profit margin before and after the foreign exchange losses.
  4. Discuss the hedging strategies Cisco could employ to mitigate currency risk.
  5. Evaluate the impact of foreign exchange losses on Cisco's cash flow and financial stability.