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Cisco Systems Inc  (NAS:CSCO) Financial Strength: 6 (As of Oct. 2017)

Cisco Systems Inc has the Financial Strength Rank of 6.

GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors:

1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.
2. Debt to revenue ratio. The lower, the better.
3. Altman Z-Score.

Cisco Systems Inc's Interest Coverage for the quarter that ended in Oct. 2017 was 11.73. Cisco Systems Inc's debt to revenue ratio for the quarter that ended in Oct. 2017 was 2.96. As of today, Cisco Systems Inc's Altman Z-Score is 3.09.


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

Cisco Systems Inc Annual Data

Jul08 Jul09 Jul10 Jul11 Jul12 Jul13 Jul14 Jul15 Jul16 Jul17
Financial Strength Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 0.00 0.00 0.00 0.00 0.00

Cisco Systems Inc Quarterly Data

Jan13 Apr13 Jul13 Oct13 Jan14 Apr14 Jul14 Oct14 Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Jan17 Apr17 Jul17 Oct17
Financial Strength Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 0.00 0.00 0.00 0.00 0.00

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.


Calculation

GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors

A company ranks high with financial strength is likely to withstand any business slowdowns and recessions.

1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.

Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.

Interest Coverage is a ratio that determines how easily a company can pay interest expenses on outstanding debt. It is calculated by dividing a company's Operating Income (EBIT) by its Interest Expense:

Cisco Systems Inc's Interest Expense for the months ended in Oct. 2017 was $-235 Mil. Its Operating Income for the months ended in Oct. 2017 was $2,756 Mil. And its Long-Term Debt & Capital Lease Obligation for the quarter that ended in Oct. 2017 was $25,684 Mil.

Cisco Systems Inc's Interest Coverage for the quarter that ended in Oct. 2017 is

Interest Coverage=-1*Operating Income (Q: Oct. 2017 )/Interest Expense (Q: Oct. 2017 )
=-1*2756/-235
=11.73

The higher the ratio, the stronger the company's financial strength is.

2. Debt to revenue ratio. The lower, the better.

Cisco Systems Inc's Debt to Revenue Ratio for the quarter that ended in Oct. 2017 is

Debt to Revenue Ratio=Total Debt (Q: Oct. 2017 ) / Revenue (Q: Oct. 2017 )
=(Current Portion of Long-Term Debt + Long-Term Debt & Capital Lease Obligation) / Revenue
=(10239 + 25684) / 12136
=2.96

3. Altman Z-Score.

Z-Score model is an accurate forecaster of failure up to two years prior to distress. It can be considered the assessment of the distress of industrial corporations.

The zones of discrimination were as such:

When Z-Score is less than 1.81, it is in Distress Zones.
When Z-Score is greater than 2.99, it is in Safe Zones.
When Z-Score is between 1.81 and 2.99, it is in Grey Zones.

Cisco Systems Inc has a Z-score of 3.09, indicating it is in Safe Zones. This implies the Z-Score is strong.

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Explanation

The maximum rank is 10. Companies with rank 7 or higher will be unlikely to fall into distressed situations. Companies with rank of 3 or less are likely in financial distress.

Cisco Systems Inc has the Financial Strength Rank of 6.


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