Financial Statement Analysis Case
Cisco Systems, Inc., the leading Internet protocol-based networking equipment company, has significant
holdings of investment securities. Use the financial statement information provided to analyze Cisco's hold-
ings and answer the following questions and complete the following requirements:
1. What types of investments are in the firm's portfolio in fiscal 2016 and 2015? What percentage of total
assets do its investments compose? Comment on changes in the composition and percentage of invest-
ments to total assets from year to year. Use fair value.
2. Which investment securities did Cisco report at fair value in fiscal 2016 and 2015? What is the differ-
ence between fair value and cost?
3. Determine the effect of changes in fair value on net income and other comprehensive income in fiscal
2016, 2015, and 2014. If unrealized gains and losses on available-for-sale securities were reported in
net income rather than other comprehensive income, what would be the effect on net income in fiscal
2016, 2015, and 2014?
4. For its investment securities, determine the types and amount of investments in each level in the hier-
archy in fiscal 2016.
At or for the Year Ended (in millions)
Total Assets
Net Income
Statement of Comprehensive Income (excerpt)
Year Ended
Net income
Available-for-sale investments:
Change in net unrealized gains (losses), net
of tax of $(49), $14, and $(146) for fiscal
2016, 2015, and 2014, respectively
Net (gains) losses reclassified into earnings,
net of tax expense (benefit) of $0, $57
and $111 for fiscal 2016, 2015, and 2014,
respectively
Total
July 30, 2016
(Fiscal 2016)
$121.652
$ 10.739
July 30, 2016
(Fiscal 2016)
$10.739
July 25, 2015
(Fiscal 2015)
$113,373
S
8 981
July 26, 2014
(Fiscal 2014)
$105.070
$
7853
July 25, 2015
(Fiscal 2015)
$8 981
July 26, 2014
(Fiscal 2014)
$7,853
$
92
S
(12)
S
233
tA
93
(100)
S
112)
(189)
44