Cisco Systems Inc. (NASDAQ:CSCO)

The analysis of the financial ratios over the six-year period reveals distinct trends in efficiency, liquidity, leverage, and profitability metrics.

Asset Turnover

The reported total asset turnover demonstrates a gradual decline from 0.53 in 2019 to 0.43 in 2024, indicating a decreasing efficiency in the use of assets to generate revenue. The adjusted total asset turnover follows a similar pattern but shows slightly higher values, peaking at 0.62 in 2023 before dropping to 0.48 in 2024. This suggests underlying operational efficiencies were stronger when adjustments are considered, yet the downward trend in the most recent year is notable.

Current Ratio (Liquidity)

Reported current ratio increased from 1.51 in 2019 to a peak of 1.72 in 2020, then declined consistently to 0.91 by 2024, reflecting a gradual deterioration in short-term liquidity and ability to cover current liabilities with current assets. The adjusted current ratio shows a more robust liquidity position, rising sharply to 3.14 in 2020 and then declining to 1.52 in 2024. Despite the decline, the adjusted values suggest the company maintained a relatively strong short-term financial cushion.

Debt to Equity and Debt to Capital (Leverage)

The reported debt to equity ratio decreased steadily from 0.73 to 0.19 between 2019 and 2023, suggesting a significant reduction in reliance on debt financing relative to equity. However, in 2024, this ratio increases markedly to 0.68, indicating an increased leverage position in the latest year. A similar trend is identified in the adjusted debt to equity ratio, declining from 0.53 to 0.15 before rising to 0.47 in 2024. Debt to capital ratios follow the same pattern, decreasing consistently through 2023 and then increasing in 2024. This could signal a strategic shift or response to market conditions leading to increased debt levels in the most recent period.

Financial Leverage

Reported financial leverage decreased from 2.91 to 2.3 by 2023, then rose to 2.74 in 2024, mirroring the debt ratios' pattern and indicating fluctuating use of debt to finance assets. Adjusted financial leverage similarly declined from 1.95 to 1.49 before rising to 1.73, highlighting a similar trend but at lower leverage levels when adjustments are incorporated.

Profitability Ratios

The reported net profit margin remained relatively stable between 22% and 23% through 2023 before falling to 19.18% in 2024, indicating a decline in profitability relative to sales. Contrarily, the adjusted net profit margin shows more variability, peaking at 26.26% in 2020 and maintaining above 21% until 2024 where it stabilizes at 22.06%. This suggests underlying profitability remained relatively strong, despite a drop in reported margins.

Return on equity (ROE) based on reported figures declined from 34.62% in 2019 to 22.7% in 2024, reflecting reduced returns for shareholders or less efficient use of equity capital. The adjusted ROE also trends downward but at a lower range, falling from 21.05% to 18.28%. This decline suggests challenges in maintaining return levels in recent years.

Return on assets (ROA) reported values fluctuated moderately, decreasing slightly from 11.88% in 2019 to 8.29% in 2024. The adjusted ROA displays a sharper increase until 2023, reaching 13.7%, before dropping to 10.58% in 2024. Generally, this indicates a moderate decline in asset efficiency and profitability during the most recent year, but adjusted metrics convey stronger returns on asset usage overall.

In summary, the company experienced a general decline in asset turnover and liquidity ratios, particularly in the latest year, while leverage ratios showed a trend of deleveraging through 2023 followed by increased debt reliance in 2024. Profitability metrics indicate some volatility with slightly declining returns on equity and assets, although adjusted figures suggest underlying strength. The 2024 data point signals cautious attention to potential shifts in operational efficiency, liquidity management, and capital structure.

Revenue Trends

Revenue exhibited a fluctuating pattern over the observed periods. Starting at $51,904 million in 2019, it declined to $49,301 million in 2020, then showed a gradual increase reaching a peak of $56,998 million in 2023 before decreasing again to $53,803 million in 2024. This indicates some variability in sales performance with a notable peak in 2023.

Total Assets Movement

Total assets decreased slightly from $97,793 million in 2019 to $94,002 million in 2022, followed by significant growth reaching $124,413 million in 2024. This suggests a strategic expansion or acquisition activity increasing the asset base toward the end of the period.

Reported Total Asset Turnover

The reported total asset turnover ratio demonstrated a gradual decline from 0.53 in 2019 to 0.51 in 2021, increased to 0.56 in 2023, before dropping substantially to 0.43 in 2024. The decline in 2024 reflects reduced efficiency in generating revenue from assets, likely influenced by the surge in total assets.

Adjusted Revenue Analysis

Adjusted revenue showed a more consistent upward trajectory compared to reported revenue, starting at $50,686 million in 2019 and rising steadily to $59,284 million in 2023. However, it decreased to $56,728 million in 2024, mirroring the trend seen in reported revenue but maintaining overall growth over time.

Adjusted Total Assets Evaluation

Adjusted total assets followed a generally downward pattern from $94,959 million in 2019 to $89,636 million in 2022, then increased notably to $118,238 million in 2024. The increase in adjusted assets indicates investment or asset revaluation impacting the balance sheet in the latter years.

Adjusted Total Asset Turnover Ratio Insights

The adjusted total asset turnover ratio reflected improvements from 0.53 in 2019 to a peak of 0.62 in 2023, suggesting enhanced effectiveness in asset utilization over most of the period. However, a decline to 0.48 in 2024 indicates a reduction in efficiency, correlating with the significant asset increase in that year.

Summary Interpretation

Overall, the data highlights a pattern of fluctuating revenues alongside strategic growth in asset holdings, especially in the final year. Despite improved asset utilization efficiency through 2023 as indicated by the adjusted turnover ratio, the 2024 data reveals a drop in efficiency associated with rapid asset expansion. This may point to a lag in translating asset growth into proportional revenue gains.

The analysis of the financial data over the six-year period reveals several noteworthy trends in liquidity and asset-liability management.

Current Assets and Current Liabilities

The current assets exhibit a general declining trend from 47,755 million USD in 2019 to 36,862 million USD in 2024, with a slight increase observed in 2023. In contrast, current liabilities display a fluctuating pattern, initially decreasing from 31,712 million USD in 2019 to around 25,331 million USD in 2020, followed by a moderate rise and a substantial increase to 40,584 million USD by 2024.

Reported Current Ratio

This ratio, indicating the ability to cover short-term liabilities with short-term assets, shows a decreasing trend. It starts at 1.51 in 2019, peaks at 1.72 in 2020, and then consistently declines to 0.91 in 2024. This suggests a weakening in short-term liquidity when considering reported figures.

Adjusted Current Assets and Liabilities

The adjusted current assets follow a similar pattern to the reported current assets, decreasing from 47,891 million USD in 2019 to 36,949 million USD in 2024, again with a peak in 2023. Adjusted current liabilities, however, decrease more significantly from 21,044 million USD in 2019 to 13,925 million USD in 2020 and remain relatively stable until a notable increase to 24,335 million USD in 2024.

Adjusted Current Ratio

The adjusted current ratio remains notably higher than the reported ratio throughout the period, indicating that adjustments provide a more favorable liquidity perspective. It rises sharply from 2.28 in 2019 to a peak of 3.14 in 2020, then gradually declines to 1.52 in 2024. Despite the decline, this adjusted ratio suggests a better short-term financial health compared to the reported figures.

Overall Insights

The overall trend highlights a reduction in both current assets and adjusted assets over time, accompanied by volatility and an eventual increase in liabilities, especially in the last year. The divergence between reported and adjusted ratios points to significant accounting or classification adjustments that positively impact the liquidity assessment. Nevertheless, the downward trend in liquidity ratios in the most recent periods signals potential challenges in meeting short-term obligations efficiently.

The financial data reveals several notable trends in the company's capital structure over the analyzed periods.

Total Debt

There was a significant decline in total debt from US$24,666 million in mid-2019 to US$8,391 million in mid-2023. However, in the latest period, there was a sharp increase to US$30,962 million.

Equity

Equity values have shown a generally upward trend, increasing steadily from US$33,571 million in 2019 to US$45,457 million in 2024, with some minor fluctuations.

Reported Debt to Equity Ratio

The reported debt to equity ratio decreased consistently from 0.73 in 2019 to a low of 0.19 in 2023, reflecting a strengthening equity position relative to debt. This ratio then rose sharply to 0.68 in 2024, indicating increased leverage.

Adjusted Total Debt

Adjusted total debt followed a similar pattern to reported total debt, declining steadily from US$25,761 million in 2019 to US$9,411 million in 2023 before jumping to US$32,232 million in 2024.

Adjusted Equity

Adjusted equity consistently rose throughout the periods, from US$48,579 million in 2019 to US$68,469 million in 2024, indicating growth in shareholder value after adjustments.

Adjusted Debt to Equity Ratio

This ratio demonstrated a steady decline from 0.53 in 2019 to 0.15 in 2023, suggesting reduced relative indebtedness. In 2024, it increased notably to 0.47, consistent with the rise in adjusted debt.

Overall, the period from 2019 to 2023 was characterized by deleveraging with decreasing debt levels and increasing equity, resulting in lower debt-to-equity ratios. The year 2024 marks a reversal with substantial increases in both reported and adjusted debt, elevating leverage ratios close to 2019 levels, although equity continued to grow modestly.

Total Debt

The total debt shows a declining trend from July 2019 to July 2023, decreasing from $24,666 million to $8,391 million. However, there is a sharp increase in July 2024, reaching $30,962 million, which is significantly higher than the initial 2019 level.

Total Capital

Total capital experiences a gradual decline from $58,237 million in July 2019 to $49,288 million in July 2022. It slightly recovers to $52,744 million in July 2023 but then rises substantially to $76,419 million in July 2024, the highest level recorded in the period analyzed.

Reported Debt to Capital Ratio

The reported debt to capital ratio consistently decreases over the period from 0.42 in July 2019 to 0.16 in July 2023, indicating a reduction in leverage. In July 2024, this ratio abruptly increases to 0.41, approaching the initial high level and suggesting a significant increase in leverage.

Adjusted Total Debt

The adjusted total debt parallels the general trend of total debt, declining from $25,761 million in July 2019 to $9,411 million in July 2023 before sharply rising to $32,232 million in July 2024. This increase surpasses the debt level at the beginning of the period.

Adjusted Total Capital

Adjusted total capital shows a slight decrease from $74,340 million in July 2019 to $69,629 million in July 2022, followed by a moderate rise to $73,427 million by July 2023, then a pronounced increase to $100,701 million in July 2024. This represents the largest adjusted capital figure within the given timeline.

Adjusted Debt to Capital Ratio

The adjusted debt to capital ratio declines steadily from 0.35 in July 2019 to 0.13 in July 2023, reflecting improved financial leverage and potentially greater equity capitalization. The ratio then sharply rises to 0.32 in July 2024, indicative of increased debt levels relative to capital, although remaining below the initial 2019 value.

Overall Observations

The data reveals a consistent effort over several years to reduce debt and improve the debt-to-capital structure, with both reported and adjusted ratios steadily declining until mid-2023. However, the fiscal year ending July 2024 demonstrates a significant reversal, marked by sharp increases in both total and adjusted debt alongside a substantial rise in total and adjusted capital. The leverage ratios concurrently increase, signaling a return to higher leverage levels. This pattern may reflect strategic financial decisions such as increased borrowing, capital restructuring, or responses to market conditions during that final year.

The financial data shows evolving trends in the company's asset base, equity, and leverage ratios over a six-year span ending in 2024. Total assets exhibit fluctuations, starting at $97.8 billion in 2019, experiencing a slight decline through 2022, followed by a notable increase to $124.4 billion by 2024. This indicates a period of asset contraction followed by substantial growth.

Equity values demonstrate a steady upward movement, rising from $33.6 billion in 2019 to $45.5 billion in 2024. This consistent growth suggests an improvement in the company's net worth and retained earnings capacity over the period.

When examining reported financial leverage, there is a downward trend from a ratio of 2.91 in 2019 to 2.3 in 2023, indicating a reduction in liabilities relative to equity and a more conservative capital structure. However, in 2024, a sharp increase to 2.74 occurs, signaling a return to higher leverage which may reflect increased borrowing or other liabilities relative to equity.

Adjusted figures follow a similar pattern to reported values but generally show lower asset and equity amounts. Adjusted total assets decreased from $94.9 billion in 2019 to a low of $89.6 billion in 2022, before climbing to $118.2 billion in 2024. Adjusted equity increased steadily from $48.6 billion in 2019 to $68.5 billion in 2024. The adjusted financial leverage ratio declined from 1.95 in 2019 to 1.49 in 2023, denoting a strengthening equity position relative to adjusted assets, before rising again to 1.73 in 2024.

The divergence between reported and adjusted leverage ratios suggests differing methodologies or adjustments affecting the assessment of leverage, with adjusted figures indicating generally more conservative leverage levels. The recent rise in both reported and adjusted leverage ratios in 2024 may merit further investigation into the causes, such as increased debt financing or changes in asset valuation.

Total Assets

Fluctuated with a decline through 2022, followed by significant growth in 2023 and 2024.

Equity

Demonstrated consistent annual growth, suggesting improved net financial strength.

Reported Financial Leverage

Generally decreased from 2019 to 2023, indicating deleveraging, but spiked in 2024.

Adjusted Total Assets

Mirrored overall trends of reported assets but at slightly lower levels, showing contraction then growth.

Adjusted Equity

Consistently increased, reflecting strengthening net financial position on an adjusted basis.

Adjusted Financial Leverage

Lower than reported leverage, decreased through 2023 before increasing in 2024, consistent with reported leverage movement.

In summary, the data reflects a phase of consolidation and reduction in leverage from 2019 through 2023, followed by resurgence in asset growth and increased leverage in 2024. The steady increase in equity throughout the period is a positive sign of financial robustness, while the recent rise in leverage ratios calls for attention to the company's financing strategies and risk exposure.

Revenue Trends

Revenue showed a slight decline from 51,904 million USD in 2019 to 49,301 million USD in 2020, followed by a modest recovery in 2021 and 2022. The highest revenue was recorded in 2023 at 56,998 million USD, after which it decreased to 53,803 million USD in 2024. Overall, the revenue trend exhibited some volatility but maintained a general growth trajectory between 2019 and 2024.

Net Income Trends

Net income demonstrated a fluctuating pattern, starting at 11,621 million USD in 2019 and declining gradually to 10,320 million USD by 2024, despite a peak at 12,613 million USD in 2023. The decline in net income in 2024 contrasted with the increase in revenue observed in 2023, suggesting potential cost or expense pressures affecting profitability.

Reported Net Profit Margin

The reported net profit margin remained relatively stable around the low 20% range during the period, with minor fluctuations. It peaked at 22.91% in 2022 and declined markedly to 19.18% in 2024, indicating reduced profitability relative to revenue in the latest year under review.

Adjusted Revenue and Adjusted Net Income

Adjusted revenue followed a trend similar to reported revenue but generally remained slightly lower, highlighting adjustments likely related to non-recurring items. It increased steadily from 50,686 million USD in 2019 to a high of 59,284 million USD in 2023, before decreasing to 56,728 million USD in 2024. Adjusted net income displayed a less consistent pattern, rising notably to 13,464 million USD in 2020, then declining and fluctuating around 12,000 to 13,000 million USD in subsequent years.

Adjusted Net Profit Margin

The adjusted net profit margin was more volatile than the reported margin, showing a significant peak of 26.26% in 2020 followed by a steady decline to around 22% in the later years. The margin remained fairly constant between 2022 and 2024, indicating some stabilization in profitability excluding extraordinary items.

Summary of Financial Performance

The data reveals that while revenue generally increased over the observed period, net income and profit margins experienced more volatility and downward pressure, especially in 2024. Adjusted figures show that excluding non-recurring items, profitability margins were higher and more variable, emphasizing potential impacts from exceptional events or operational adjustments. The decline in both reported net income and profit margin in 2024 signals room for attention to cost management or efficiency improvements going forward.

Net Income

Net income demonstrated variability over the period, starting at 11,621 million US dollars in 2019 and exhibiting a slight decline to 10,320 million US dollars by 2024. The highest net income was observed in 2023 with 12,613 million US dollars, indicating a peak before the subsequent decline in 2024.

Equity

Reported equity showed an overall upward trend, increasing from 33,571 million US dollars in 2019 to 45,457 million US dollars in 2024. Despite a minor dip in 2022, equity recovery and growth continued through 2023 and 2024, reflecting an expansion of the company's net asset base during the period.

Reported Return on Equity (ROE)

Reported ROE gradually declined from 34.62% in 2019 to 22.7% in 2024. Although it fluctuated somewhat, the trend indicates a reduction in the efficiency of generating profits from equity over the years, with a notable drop between 2023 and 2024.

Adjusted Net Income

The adjusted net income figures displayed fluctuations, reaching a peak of 13,464 million US dollars in 2020, followed by a decrease in subsequent years but recovering moderately by 2024 at 12,514 million US dollars. This indicates some variability when excluding certain adjustments, but the level remains generally stable after 2020.

Adjusted Equity

Adjusted equity increased steadily from 48,579 million US dollars in 2019 to 68,469 million US dollars in 2024. This consistent growth suggests an increasing capital base when adjustments are considered, reflecting strengthening financial foundations over the period.

Adjusted Return on Equity (ROE)

Adjusted ROE showed a general decline from 21.05% in 2019 to 18.28% in 2024. Peaking at 24.48% in 2020, it then decreased gradually, indicating reduced profitability relative to adjusted equity. The downward trend points to a decrease in efficiency in generating adjusted net income from the adjusted equity base over time.

The financial data reveals several key trends over the six-year period. Net income shows fluctuations, starting at 11,621 million US dollars in 2019, declining slightly to 10,591 million in 2021, then peaking at 12,613 million in 2023 before falling to 10,320 million in 2024. This pattern suggests variability in profitability, with the highest net income recorded in 2023.

Total assets also display a dynamic trend. After a decrease from 97,793 million US dollars in 2019 to 94,002 million in 2022, the amount rises markedly to 124,413 million in 2024. This significant increase in total assets in the latest period could indicate expansion or acquisition activity.

Reported Return on Assets (ROA) fluctuates moderately. It starts at 11.88% in 2019, drops to 10.86% in 2021, then rises to 12.57% in 2022 and maintains above 12% in 2023. However, it declines to 8.29% in 2024. The drop in ROA in 2024 reflects reduced efficiency in generating net income relative to total assets.

The adjusted net income exhibits a different trend compared to the reported net income. It increases notably from 10,228 million in 2019 to 13,464 million in 2020, then slightly declines to 11,344 million by 2022, followed by recovery to a peak of 13,064 million in 2023, and a marginal decrease to 12,514 million in 2024. This adjusted figure shows less volatility than the reported net income, suggesting adjustments smooth out some fluctuations.

Similarly, adjusted total assets generally decline from 94,959 million in 2019 to 89,636 million in 2022, followed by an increase to 118,238 million in 2024, mirroring the pattern observed with reported total assets but with slightly lower levels consistently.

Adjusted ROA presents a more positive trend compared to reported ROA. It rises sharply from 10.77% in 2019 to 14.79% in 2020, then declines gradually to 12.66% in 2022, rises again to 13.7% in 2023, and finally drops to 10.58% in 2024. Despite the decline in the last period, adjusted ROA remains notably higher than the reported ROA, indicating better profitability when adjustments are accounted for.

Profitability

Both reported and adjusted net income show variability over time, with adjusted net income generally maintaining higher and more stable figures. The decline in net income and ROA in 2024 suggests recent challenges in profitability.

Asset Base

The company’s asset base decreased initially but experienced substantial growth by 2024, which could imply strategic investments or acquisitions. Adjusted assets track this pattern but consistently remain slightly lower than reported assets.

Return on Assets

Adjusted ROA trends higher than reported ROA through most of the period, implying that adjustments provide a more favorable view of asset efficiency. The decline in both measures in 2024 points to lower returns on the significantly increased asset base.