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Obsolete inventory, inventory policy footnotes: Cisco 2013

A company's annual report usually will identify the inventory method used. You can analyze the effects of the inventory method if you have the income statement and balance sheet of a company. Go to the Cisco website(see attachments).

Address the following questions based on the current year's Annual Report on Cisco's website:

1. At Cisco's fiscal year-end, what was the net inventory on the balance sheet?
2. How has this changed from the previous fiscal year-end?
3. How much of the inventory was finished goods?
4. What inventory method does Cisco use?
5. Is inventory considered a current or noncurrent asset?
6. What is obsolescence? Should all companies report the amount of obsolete inventory on-hand? Why or why not?

Solution Preview

Using the 2013 annual report from www.cisco.com (under investor relations).

1. At Cisco's fiscal year-end, what was the net inventory on the balance sheet?
$1,476 million

2. How has this changed from the previous fiscal year-end?
Prior year was $1,663 so it decreased by $187 millioin.

3. How much of the inventory was finished goods?
All of it. They obtain inventory from distributors and so they ...

Solution Summary

Your discussion is 271 words plus a cut and paste from portions of Cisco's 2013 Annual Report to illustrate.

$2.19