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please answer correctly and show workings. thanks a) compute the return on assets (ROA) and return on equity (ROE) for 2016 (8 points) (b) Complete
please answer correctly and show workings. thanks
a) compute the return on assets (ROA) and return on equity (ROE) for 2016 (8 points) (b) Complete the DuPont disaggregation of return on equity (ROE) for 2016 . Analyze the DuPont financial ratios and discuss how Cisco Systems Inc. can achieve a high ROE. (12 points) (c) Compute net operating assets (NOA) for 2016. Note, for the balance sheet items of Cisco Systems, non-operating assets include cash and cash equivalents, and investments. Nonoperating liabilities include short-term debt and long-term debt. (6 points) 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 Lemer, 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. Cisco Systems Inc. Consolidated Statements of Income Net income $10,739$8,981 2 Cisco Systems Inc. Consolidated Balance Sheets In millions, except par value July 30, 2016 July 25, 2015 Assets Current assets Cash and cash equivalents Investments $7,63158,125$6,87753,539 \begin{tabular}{lll} Accounts receivable, net of allowance for doubtful accounts of $249 & 5,847 & 5,344 \\ at July 30,2016 and $302 at July 25,2015 & 1,217 & 1,627 \\ Inventories & 4,272 & 4,491 \\ Financing receivables, net & 1,627 & 1,490 \\ Other current assets & 78,719 & 73,368 \\ \hline Total current assets & 3,506 & 3,332 \\ \hline Property and equipment, net & 4,158 & 3,858 \\ Financing receivables, net & 26,625 & 24,469 \\ \hline Goodwill & 2,501 & 2,376 \\ \hline Purchased intangible assets, net & 4,299 & 4,454 \\ \hline Deferred tax assets & 1,844 & 1,516 \\ \hline Other assets & $121,652 & $113,373 \end{tabular} Liabilities Current liabilities Short-termdebtAccountspayableIncometaxespayableAccruedcompensationDeferredrevenueOthercurrentliabilitiesTotalcurrentliabilitiesLong-termdebtIncometaxespayableDeferredrevenueOtherlong-termliabilitiesTotalliabilities$4,1601,0565172,95110,1556,07224,91124,4839256,3171,43158,067$3,8971,104623,0499,8245,47623,41221,4571,8765,3591,56253,666 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 Retained earnings Accumulated other comprehensive income (loss) Total Cisco shareholders' equity Noncontrolling interests Total equity Total liabilities and equity 44,51619,396(326)63,586(1)63,58543,59216,04559619$9,707$113,373 Step by Step Solution
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