Cisco Systems, Inc. is a multinational information technology company headquartered in San Jose, California, that produces and sells networking hardware, telecommunications equipment and other high-technology services. Cisco Systems was founded in December 1984 by Leonard Bosack and Sandy Lerner, two Stanford University computer scientists, who pioneered the concept of a local area network (LAN). In 1990, Cisco Systems went public with a market capitalization of $224 million. By 2000, Cisco had become the most valuable company in the world with a more than $500 billion market capitalization. The stock was initially listed on the NASDAQ in 1990, and then was added to the Dow Jones Industrial Average on June 8, 2009. Cisco is currently included in the S&P 500 Index, the Russell 1000 Index, NASDAQ-100 Index and the Russell 1000 Growth Stock Index.^[1]

As Figure 1 shows, the stock price of Cisco Systems peaked in 1999-2000 before the burst of internet bubble. However, its stock price has been fluctuating in the range of $10-$30 since 2001.

Following are the income statement and balance sheet for Cisco Systems for the year ended July 30, 2016.

Cisco Systems Inc.

Consolidated Statements of Income

Years Ended December ($ 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 valueJuly 30, 2016

July 25, 2015

Assets

Current assets

Cash and cash equivalents$7,631

$6,877

Investments58,125

53,539

Accounts receivable, net of allowance for doubtful accounts of $249

5,847 at July 30, 2016 and $302 at July 25, 2015

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

Liabilities

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

Cisco Systems Inc. Consolidated Balance Sheets

In millions, except par value

July 30, 2016

July 25, 2015

Cisco shareholders' equity

Preferred stock, no par value: 5 shaes 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

Question:

(a)Compute net operating assets (NOA) for 2016.