plle 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 LO2, 3,7 CISCO SYS INC. (CSCO July 30, 2016 July 25, 2015 Years Ended (in millions) Revenue Product Service Total revenue. Cost of sales Product Service .... $37.254 11,993 $37,750 11,411 49,161 49,247 14,161 4,126 18,287 30,960 15,377 4,103 19,480 29,681 6,296 Total cost of sales Gross margin .... Operating expenses Research and development Sales and marketing .... General and administrative. Amortization of purchased intangible assets Restructuring and other charges Total operating expenses Operating income. Interest income Interest expense...... Other income (loss), net Interest and other income (loss), net. Income before provision for income taxes Provision for income taxes. Net income 9,619 1,814 303 268 18,300 12,660 1,005 (676) (69) 260 12,920 2,181 $10,739 6,207 9,821 2,040 359 484 18,911 10,770 769 (566) 228 431 11,201 2,220 $ 8,981 CISCO SYSTEMS INC. Consolidated Balance Sheets July 30, 2016 July 25, 2015 In millions, except par value $ 7,631 58,125 $ 6,877 53,539 5,344 5,847 1,217 4.272 1,627 1,627 4,491 Assets Current assets Cash and cash equivalents. Investments .......... Accounts receivable, net of allowance for doubtful accounts of $249 at July 30, 2016 and $302 at July 25, 2015 Inventories ..... Financing receivables, net Other current assets Total current assets. Property and equipment, net Financing receivables, net Goodwill Purchased intangible assets, net. Deferred tax assets Other assets. Total assets 78,719 3,506 4,158 26,625 2,501 4.299 1,844 $121,652 1,490 73.368 3.332 3,858 24,469 2,376 4,454 1,516 $113,373 continued change for interest income and expense, goodwill, other long-term assets, investments, nonoperating (such as General and administrative/Total revenue is 0.03685 would be rounded to 3.7%). Assume no income, common stock, accumulated other comprehensive income, and noncontrolling interests. What July 30, 2016 July 25, 2015 Module 11 i Forecasting Financial Statements $ 4,160 1,056 517 2,951 10.155 6,072 24,911 24,483 925 6,317 1,431 58,067 $ 3,897 1.104 82 3,049 9.824 5,476 23,412 21,457 1,876 5,359 1,562 53,666 continued from prior page In millions, except par value Liabilities and Equity Current Mabilities Short-term debt Accounts payable. Income taxes payable. Accrued compensation. Deferred revenue .... Other current liabilities Total current liabilities Long-term debt Income taxes payable Deferred revenue ...... Other long-term liabilities Total liabilities 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 Retained earnings................... Accumulated other comprehensive income (loss) Total Cisco shareholders' equity Noncontrolling interests ...... 43,592 16,045 44,516 19,396 (326) 63,586 (1) 61 59,698 9 59,707 63,585 $121,652 $113,373 Total equity ...... Total liabilities and equity Required Forecast Cisco's fiscal 2017 income statement, balance sheet, and statement of cash flows; round fore- casts to $ millions. (Hint: Forecast total revenues by projecting a continuation of year-over-year percent- age 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 place do the forecasts imply about the financing needs of Cisco? plle 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 LO2, 3,7 CISCO SYS INC. (CSCO July 30, 2016 July 25, 2015 Years Ended (in millions) Revenue Product Service Total revenue. Cost of sales Product Service .... $37.254 11,993 $37,750 11,411 49,161 49,247 14,161 4,126 18,287 30,960 15,377 4,103 19,480 29,681 6,296 Total cost of sales Gross margin .... Operating expenses Research and development Sales and marketing .... General and administrative. Amortization of purchased intangible assets Restructuring and other charges Total operating expenses Operating income. Interest income Interest expense...... Other income (loss), net Interest and other income (loss), net. Income before provision for income taxes Provision for income taxes. Net income 9,619 1,814 303 268 18,300 12,660 1,005 (676) (69) 260 12,920 2,181 $10,739 6,207 9,821 2,040 359 484 18,911 10,770 769 (566) 228 431 11,201 2,220 $ 8,981 CISCO SYSTEMS INC. Consolidated Balance Sheets July 30, 2016 July 25, 2015 In millions, except par value $ 7,631 58,125 $ 6,877 53,539 5,344 5,847 1,217 4.272 1,627 1,627 4,491 Assets Current assets Cash and cash equivalents. Investments .......... Accounts receivable, net of allowance for doubtful accounts of $249 at July 30, 2016 and $302 at July 25, 2015 Inventories ..... Financing receivables, net Other current assets Total current assets. Property and equipment, net Financing receivables, net Goodwill Purchased intangible assets, net. Deferred tax assets Other assets. Total assets 78,719 3,506 4,158 26,625 2,501 4.299 1,844 $121,652 1,490 73.368 3.332 3,858 24,469 2,376 4,454 1,516 $113,373 continued change for interest income and expense, goodwill, other long-term assets, investments, nonoperating (such as General and administrative/Total revenue is 0.03685 would be rounded to 3.7%). Assume no income, common stock, accumulated other comprehensive income, and noncontrolling interests. What July 30, 2016 July 25, 2015 Module 11 i Forecasting Financial Statements $ 4,160 1,056 517 2,951 10.155 6,072 24,911 24,483 925 6,317 1,431 58,067 $ 3,897 1.104 82 3,049 9.824 5,476 23,412 21,457 1,876 5,359 1,562 53,666 continued from prior page In millions, except par value Liabilities and Equity Current Mabilities Short-term debt Accounts payable. Income taxes payable. Accrued compensation. Deferred revenue .... Other current liabilities Total current liabilities Long-term debt Income taxes payable Deferred revenue ...... Other long-term liabilities Total liabilities 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 Retained earnings................... Accumulated other comprehensive income (loss) Total Cisco shareholders' equity Noncontrolling interests ...... 43,592 16,045 44,516 19,396 (326) 63,586 (1) 61 59,698 9 59,707 63,585 $121,652 $113,373 Total equity ...... Total liabilities and equity Required Forecast Cisco's fiscal 2017 income statement, balance sheet, and statement of cash flows; round fore- casts to $ millions. (Hint: Forecast total revenues by projecting a continuation of year-over-year percent- age 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 place do the forecasts imply about the financing needs of Cisco