What Does Cisco’s Debt Look Like?


Over the past three months, shares of Cisco Systems CSCO increased by 8.84%. Before looking at the size of the debt, let’s look at the amount of debt Cisco Systems has.

Cisco Systems Debt

According to Cisco Systems’ latest financial statement released on November 17, 2020, total debt stands at $14.57 billion, with $9.56 billion in long-term debt and $5.00 billion in current debt. . After adjusting for $10.82 billion in cash equivalents, the company has net debt of $3.74 billion.

Let’s define some of the terms we used in the paragraph above. Current debt is the portion of a company’s debt that is due within one year, while long-term debt is the portion due in more than one year. Cash equivalents include cash and all liquid securities with maturities of 90 days or less. Total debt equals current debt plus long-term debt minus cash equivalents.

To understand how leveraged a company is, shareholders look at the debt ratio. Considering Cisco Systems’ $95.00 billion in total assets, the leverage ratio is 0.15. Generally speaking, a debt ratio greater than one means that a large part of the debt is financed by assets. As the debt-to-equity ratio increases, the risk of loan default also increases if interest rates were to rise. Different industries have different tolerance thresholds for debt ratios. A debt ratio of 25% may be higher for one industry and average for another.

Debt size

Debt is an important factor in a company’s capital structure and can help it achieve growth. Debt typically has a relatively lower cost of funding than equity, making it an attractive option for executives.

However, due to interest payment obligations, a company’s cash flow may be affected. Having financial leverage also allows companies to use additional capital for business operations, allowing shareholders to retain excess profits generated by debt capital.

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What Does Cisco Systems Debt Look Like?


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