Cisco System, Inc., the leading Internet protocol- based networking equipment company, has...

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Cisco System, 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 holdings and address the following questions:   1. What is the composition of investments in the firm’s portfolio of held- to- maturity, trading, and available-for- sale securities in fiscal 2013 and 2012? What percentage of total asset do its investments compose? Comment on changes in the composition and percentage of investments to total assets from year to year. Use fair value.   2. Which investment securities did Cisco report at fair value in fiscal 2013 and 2012? What is the difference between fair value and cost?   3. Determine the effect of changes in fair value on net income and other comprehensive income in fiscal 2013, 2012, and 2011. 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 2013, 2012, and 2011?   4. For its investment securities, determine the types and amount of investments in each level in the ­hierarchy in fiscal XXXXXXXXXXDiscuss the valuation methods used and comment on any assumptions and estimates used in valuation.   6. The majority of Cisco’s investment securities are classified as available- for- sale. Why is Cisco concerned about the potential harm to earnings when changes in the fair values of these secur

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CISCO SYSTEM, INC.
Table of Contents
Answer 1	3
Answer 2	3
Answer 3	3
Answer 4	3
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Answer 6	4
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Answer 1.
The investment portfolio of Cisco consisted of fixed income securities and available for sale securities such as US government securities, the government agency securities of US, Non-Government and agency securities of US, corporate debt securities and the Agency mortgaged-backed securities of US. The percentage of investment to total assets as on 2013, 2012 and 2011 are 42.18%, 42.41% and 42.39% respectively. Thus, in 2013 there was a decline in the investment to total asset ratio by -0.23% compared to the 2012 increase by 0.02% over 2011.

Cisco System, Inc., the leading Internet protocol- based networking equipment company, has significant holdings of investment securities. Use the financial statement information provided to analyze...

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