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Cisco Systems (XSGO:CSCO) Financial Strength

: 8 (As of Jan. 2023)
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Cisco Systems has the Financial Strength Rank of 8. It shows strong financial strength and is unlikely to fall into distressed situations.

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's Interest Coverage for the quarter that ended in Jan. 2023 was 33.04. Cisco Systems's debt to revenue ratio for the quarter that ended in Jan. 2023 was 0.16. As of today, Cisco Systems's Altman Z-Score is 3.49.


Competitive Comparison

For the Communication Equipment subindustry, Cisco Systems's Financial Strength, along with its competitors' market caps and Financial Strength data, can be viewed below:

* 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. Note that "N/A" values will not show up in the chart.

   

Cisco Systems Financial Strength Distribution

For the Hardware industry and Technology sector, Cisco Systems's Financial Strength distribution charts can be found below:

* The bar in red indicates where Cisco Systems's Financial Strength falls in comparison to its industry or sector. The grey bar indicates the Financial Strength's extreme value range as defined by GuruFocus.



Cisco Systems Financial Strength 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's Interest Expense for the months ended in Jan. 2023 was $-107 Mil. Its Operating Income for the months ended in Jan. 2023 was $3,535 Mil. And its Long-Term Debt & Capital Lease Obligation for the quarter that ended in Jan. 2023 was $7,637 Mil.

Cisco Systems's Interest Coverage for the quarter that ended in Jan. 2023 is

Interest Coverage=-1*Operating Income (Q: Jan. 2023 )/Interest Expense (Q: Jan. 2023 )
=-1*3535/-107
=33.04

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

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

Cisco Systems's Debt to Revenue Ratio for the quarter that ended in Jan. 2023 is

Debt to Revenue Ratio=Total Debt (Q: Jan. 2023 ) / Revenue
=(Short-Term Debt & Capital Lease Obligation + Long-Term Debt & Capital Lease Obligation) / Revenue
=(1250 + 7637) / 54368
=0.16

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 has a Z-score of 3.49, indicating it is in Safe Zones. This implies the Z-Score is strong.

Good Sign:

Altman Z-score of 3.49 is strong.

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Cisco Systems  (XSGO:CSCO) Financial Strength 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 has the Financial Strength Rank of 8. It shows strong financial strength and is unlikely to fall into distressed situations.


Cisco Systems Financial Strength Related Terms

Thank you for viewing the detailed overview of Cisco Systems's Financial Strength provided by GuruFocus.com. Please click on the following links to see related term pages.


Cisco Systems (XSGO:CSCO) Business Description

Cisco Systems logo
Address
170 West Tasman Drive, San Jose, CA, USA, 95134-1706
Cisco Systems is the largest provider of networking equipment in the world and one of the largest software companies in the world. Its largest businesses are selling networking hardware and software (where it has leading market shares) and cybersecurity software like firewalls. It also has collaboration products, like its Webex suite, and observability tools. It primarily outsources its manufacturing to third parties and has a large sales and marketing staff—25,000 strong across 90 countries. Overall, Cisco employees 80,000 employees and sells its products globally.

Cisco Systems (XSGO:CSCO) Headlines