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Cisco Systems (XSGO:CSCO) Altman Z-Score : 2.33 (As of May. 19, 2024)


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What is Cisco Systems Altman Z-Score?

The Altman Z-Score is a model designed to predict the likelihood of a company going bankrupt within the next two years. Created by American finance professor Edward Altman in 1968, the model is specifically designed for publicly traded manufacturing companies with assets greater than $1 million.

Warning Sign:

Altman Z-score of 2.33 is in the grey area. This implies that the company is under some kind of financial stress. If it is below 1.8, the company may face bankruptcy risk.

Cisco Systems has a Altman Z-Score of 2.33, indicating it is in Grey Zones. This implies that Cisco Systems is in some kind of financial stress. If it is below 1.81, the company may face bankrupcy risk.

The zones of discrimination were as such:

When Altman Z-Score <= 1.8, it is in Distress Zones.
When Altman Z-Score >= 3, it is in Safe Zones.
When Altman Z-Score is between 1.8 and 3, it is in Grey Zones.

The historical rank and industry rank for Cisco Systems's Altman Z-Score or its related term are showing as below:

XSGO:CSCO' s Altman Z-Score Range Over the Past 10 Years
Min: 2.29   Med: 3.28   Max: 3.88
Current: 2.33

During the past 13 years, Cisco Systems's highest Altman Z-Score was 3.88. The lowest was 2.29. And the median was 3.28.


Cisco Systems Altman Z-Score Historical Data

The historical data trend for Cisco Systems's Altman Z-Score can be seen below:

* 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.

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Cisco Systems Altman Z-Score Chart

Cisco Systems Annual Data
Trend Jul14 Jul15 Jul16 Jul17 Jul18 Jul19 Jul20 Jul21 Jul22 Jul23
Altman Z-Score
Get a 7-Day Free Trial Premium Member Only Premium Member Only 3.36 3.32 3.62 3.25 3.44

Cisco Systems Quarterly Data
Jul19 Oct19 Jan20 Apr20 Jul20 Oct20 Jan21 Apr21 Jul21 Oct21 Jan22 Apr22 Jul22 Oct22 Jan23 Apr23 Jul23 Oct23 Jan24 Apr24
Altman Z-Score Get a 7-Day Free Trial 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 3.29 3.44 3.70 3.50 2.29

Competitive Comparison of Cisco Systems's Altman Z-Score

For the Communication Equipment subindustry, Cisco Systems's Altman Z-Score, along with its competitors' market caps and Altman Z-Score 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's Altman Z-Score Distribution in the Hardware Industry

For the Hardware industry and Technology sector, Cisco Systems's Altman Z-Score distribution charts can be found below:

* The bar in red indicates where Cisco Systems's Altman Z-Score falls into.



Cisco Systems Altman Z-Score Calculation

Altman 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.

Cisco Systems's Altman Z-Score for today is calculated with this formula:

Z=1.2*X1+1.4*X2+3.3*X3+0.6*X4+1.0*X5
=1.2*-0.0343+1.4*0+3.3*0.122+0.6*2.5256+1.0*0.4501
=2.33

* 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. GuruFocus does not calculate Altman Z-Score when X4 or X5 value is 0.

Trailing Twelve Months (TTM) ended in Apr. 2024:
Total Assets was $122,998 Mil.
Total Current Assets was $35,886 Mil.
Total Current Liabilities was $40,108 Mil.
Retained Earnings was $0 Mil.
Pre-Tax Income was 2235 + 3161 + 4442 + 4471 = $14,309 Mil.
Interest Expense was -357 + -120 + -111 + -111 = $-699 Mil.
Revenue was 12702 + 12791 + 14668 + 15203 = $55,364 Mil.
Market Cap (Today) was $195,049 Mil.
Total Liabilities was $77,230 Mil.

* Note that for stock reported semi-annually or annually, GuruFocus uses latest annual data as the TTM data.

X1=Working Capital/Total Assets
=(Total Current Assets - Total Current Liabilities)/Total Assets
=(35886 - 40108)/122998
=-0.0343

X3=Earnings Before Interest and Taxes/Total Assets
=(Pre-Tax Income - Interest Expense)/Total Assets
=(14309 - -699)/122998
=0.122

X4=Market Value Equity/Book Value of Total Liabilities
=Market Cap/Total Liabilities
=195049.342/77230
=2.5256

X5=Revenue/Total Assets
=55364/122998
=0.4501

The zones of discrimination were as such:

Distress Zones - 1.81 < Grey Zones < 2.99 - Safe Zones

Cisco Systems has a Altman Z-Score of 2.33 indicating it is in Grey Zones.

Study by Altman found that companies that are in Distress Zone have more than 80% of chances of bankruptcy in two years.


Cisco Systems  (XSGO:CSCO) Altman Z-Score Explanation

X1: The Working Capital/Total Assets (WC/TA) ratio is a measure of the net liquid assets of the firm relative to the total capitalization. Working capital is defined as the difference between current assets and current liabilities. Ordinarily, a firm experiencing consistent operating losses will have shrinking current assets in relation to total assets. Altman found this one proved to be the most valuable liquidity ratio comparing with the current ratio and the quick ratio. This is however the least significant of the five factors.

X2: Retained Earnings/Total Assets: the RE/TA ratio measures the leverage of a firm. Retained earnings is the account which reports the total amount of reinvested earnings and/or losses of a firm over its entire life. Those firms with high RE, relative to TA, have financed their assets through retention of profits and have not utilized as much debt.

X3, Earnings Before Interest and Taxes/Total Assets (EBIT/TA): This ratio is a measure of the true productivity of the firm's assets, independent of any tax or leverage factors. Since a firm's ultimate existence is based on the earning power of its assets, this ratio appears to be particularly appropriate for studies dealing with corporate failure. This ratio continually outperforms other profitability measures, including cash flow.

X4, Market Value of Equity/Book Value of Total Liabilities (MVE/TL): The measure shows how much the firm's assets can decline in value (measured by market value of equity plus debt) before the liabilities exceed the assets and the firm becomes insolvent.

X5, Revenue/Total Assets (S/TA): The capital-turnover ratio is a standard financial ratio illustrating the sales generating ability of the firm's assets.

Read more about Altman Z-Score and the original research.


Be Aware

Altman Z-Score does not apply to financial companies.


Cisco Systems Altman Z-Score Related Terms

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Cisco Systems (XSGO:CSCO) Business Description

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.