Analysis of Cisco System annual report

1. Cisco Systems (stock symbol: CSCO) uses PriceWaterhouseCoopers LLP as its independent accountants (Cisco Systems, 2000, p. 46).

2. According to PriceWaterhouseCoopers, the financial statements were prepared in accordance with generally accepted accounting principles as practiced in the USA, and the accountants believe that the company does not appear to have deliberately misrepresented its financial position (Cisco Systems, 2000, p. 46).

3. The external audit checks that the steps used to develop financial data issued by a company are valid and in keeping with standard accounting and control practices. External auditors look for irregularities in reporting practices to determine that the information on financial statements is fundamentally valid. The accuracy of the data is not considered by the auditors, only the procedures used to arrive at the data.

4. An auditor's report stating that financial statements have been prepared in accordance with generally accepted accounting principles tells readers that the financial statements are probably an accurate representation of the company's financial position. If an audit report states that there are irregularities, investors and creditors will immediately lose confidence in the company's ability to continue as a viable operation.

For the corporation, an audit report that gives the opinion that the financial statements are an accurate representation of the business means that the company's personnel can use those financia

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tems has a paid-in capital value of $14,602 (calculated as common stock and paid-in capital less the par value of outstanding shares) (Cisco Systems, 2000, p. 28). 10. The average price per share received by the company for all common stock can be calculated by taken the company's value of common stock and paid-in capital ($14,609,000,000) (Cisco Systems, 2000, p. 28) and dividing by the number of shares issued (7,438,000,000) (Cisco Systems, 2000, p. 25) yielding an average price of $1.9641032. 11. Information from the company's financial statements is summarized below (Cisco Systems, 2000, pp. 25-27) and used in the calculation of financial ratios. Balance Sheet ($Millions) 2000 1999 Cash 4234 913 A/R 2299 1250 Inventory 1232 658 Other Current Assets 3345 1940 Current Assets 11110 4761 PPE (net) 1426 825 Other 20334 9307 Total Assets 32870 14893 Notes, A/P 739 374 Current Portion LT Debt 0 0 Accrued Compensation 1317 679 Other Current 3140 1985 Current Liabilities 5196 3038 LT Debt 0 0 Other Liabiliti

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