How cisco values its inventory on the balance sheet

Reference no: EM131423473

The 2009 annual report for Cisco Systems contains the following information (dollars in millions):

On the income statement Cisco reported that the cost of sales related to the inventory was $10.5 billion ($11.7 billion for the year ending 7/26/2008). Based on these dollar amounts, inventory is an important investment for Cisco's business cycle. In the notes to the financial statements the company reports, "Inventories are stated at the lower of cost or market. . . . The Company provides inventory write-downs based on excess and obsolete inventories determined primarily by future demand forecast. The write-down is measured as the difference between the cost of the inventory and market based upon assumptions about future demand and charged to . . . cost of sales."

a. Explain what would happen to the balance sheet value of inventory ($1.074 billion in the year ending 7/25/2009) if the company determined that a portion of its inventory was "obsolete."

b. Who is ultimately responsible for determining the forecast for future demand for the company's inventories?

c. Discuss how the concepts of objectivity, conservatism, and market value enter into how Cisco values its inventory on the balance sheet.

Reference no: EM131423473

Questions Cloud

Criteria that are often used in consumer segmentation : Critically evaluate two variables/criteria that are often used in consumer segmentation. Segment a market of your choice and describe the derived groups (the segmentation should be theoretical and should be based on secondary sources and your perso..

Does google research on the performance explain : Case Study - "Project Oxygen" Resuscitates Google's Poor Performing Bosses. Why isn't having the greatest amount of technical expertise the key to being a good supervisor at Google

Provide all details for test and summarize your conclusion : Also report a 95% confidence interval for the difference in proportions (2007 versus 2010) and explain what information is provided in the interval that is not given in the significance test results.

How would milton erickson approach the current presenting : How would Jay Haley or Chloe Madanes approach the current presenting problem? Identify and describe two interventions that he/she may use and why.How would an MRI-style therapist approach the current presenting problem? Identify and describe two ..

How cisco values its inventory on the balance sheet : Explain what would happen to the balance sheet value of inventory ($1.074 billion in the year ending 7/25/2009) if the company determined that a portion of its inventory was "obsolete."

Redo the calculations for the significance test : Redo the calculations for the significance test and the confidence interval under the following assumptions, and summarize the effects of the sample sizes on the results.

Examine whether the two proportions are equal : Give a 90% confidence interval for the difference and briefly summarize what the data show.- Use a test of significance to examine whether the two proportions are equal.

Write a brief explanation of the use of informatics : Write a brief explanation of the use of informatics, the applications, and the methodologies used to monitor the event/trend you selected. Explain your position on whether the methods used to monitor the event/trend (i.e., systems, procedures) wer..

List the criteria of revenue recognition : . Evaluate the accounting standard in terms of the principle of revenue recognition and matching. List the criteria of revenue recognition, and suggest when it would be appropriate to recognize the revenue from a ticket sale.

User Account

All Pages