GURUFOCUS.COM » STOCK LIST » Technology » Hardware » Cisco Systems Inc (NAS:CSCO) » Definitions » ROIC %

CSCO (Cisco Systems) ROIC % : 7.96% (As of Jul. 2024)


View and export this data going back to 1990. Start your Free Trial

What is Cisco Systems ROIC %?

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Cisco Systems's annualized return on invested capital (ROIC %) for the quarter that ended in Jul. 2024 was 7.96%.

As of today (2024-10-31), Cisco Systems's WACC % is 8.80%. Cisco Systems's ROIC % is 10.97% (calculated using TTM income statement data). Cisco Systems generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.


Cisco Systems ROIC % Historical Data

The historical data trend for Cisco Systems's ROIC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Cisco Systems ROIC % Chart

Cisco Systems Annual Data
Trend Jul15 Jul16 Jul17 Jul18 Jul19 Jul20 Jul21 Jul22 Jul23 Jul24
ROIC %
Get a 7-Day Free Trial Premium Member Only Premium Member Only 14.88 14.13 14.15 15.73 10.54

Cisco Systems Quarterly Data
Oct19 Jan20 Apr20 Jul20 Oct20 Jan21 Apr21 Jul21 Oct21 Jan22 Apr22 Jul22 Oct22 Jan23 Apr23 Jul23 Oct23 Jan24 Apr24 Jul24
ROIC % Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 19.24 17.47 12.34 8.81 7.96

Competitive Comparison of Cisco Systems's ROIC %

For the Communication Equipment subindustry, Cisco Systems's ROIC %, along with its competitors' market caps and ROIC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


Cisco Systems's ROIC % Distribution in the Hardware Industry

For the Hardware industry and Technology sector, Cisco Systems's ROIC % distribution charts can be found below:

* The bar in red indicates where Cisco Systems's ROIC % falls into.



Cisco Systems ROIC % Calculation

Cisco Systems's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Jul. 2024 is calculated as:

ROIC % (A: Jul. 2024 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (A: Jul. 2023 ) + Invested Capital (A: Jul. 2024 ))/ count )
=12970 * ( 1 - 15.64% )/( (83265 + 124392)/ 2 )
=10941.492/103828.5
=10.54 %

where

Cisco Systems's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Jul. 2024 is calculated as:

ROIC % (Q: Jul. 2024 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (Q: Apr. 2024 ) + Invested Capital (Q: Jul. 2024 ))/ count )
=10920 * ( 1 - 9.77% )/( (123299 + 124392)/ 2 )
=9853.116/123845.5
=7.96 %

where

Note: The Operating Income data used here is four times the quarterly (Jul. 2024) data.

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Cisco Systems  (NAS:CSCO) ROIC % Explanation

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.

There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.

Why is ROIC % important?

Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, Cisco Systems's WACC % is 8.80%. Cisco Systems's ROIC % is 10.97% (calculated using TTM income statement data). Cisco Systems generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases. Cisco Systems earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Be Aware

Like ROE % and ROA %, ROIC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.


Cisco Systems ROIC % Related Terms

Thank you for viewing the detailed overview of Cisco Systems's ROIC % provided by GuruFocus.com. Please click on the following links to see related term pages.


Cisco Systems Business Description

Address
170 West Tasman Drive, San Jose, CA, USA, 95134-1706
Cisco Systems is the largest provider of networking equipment in the world and one of the largest software companies in the world. Its largest businesses are selling networking hardware and software (where it has leading market shares) and cybersecurity software such as firewalls. It also has collaboration products, like its Webex suite, and observability tools. It primarily outsources its manufacturing to third parties and has a large sales and marketing staff—25,000 strong across 90 countries. Overall, Cisco employs 80,000 people and sells its products globally.
Executives
Maria Victoria Wong officer: SVP & Chief Acctg Officer C/O CISCO SYSTEMS, INC., 170 WEST TASMAN DRIVE, SAN JOSE CA 95134
Deborah L Stahlkopf officer: EVP and Chief Legal Officer C/O CISCO SYSTEMS, INC., 170 WEST TASMAN DRIVE, SAN JOSE CA 95134
Richard Scott Herren officer: EVP and CFO 851 WEST CYPRESS CREEK ROAD, FORT LAUDERDALE FL 33309
Charles Robbins officer: SVP, Worldwide Sales 170 WEST TASMAN DRIVE, SAN JOSE CA 95134
Jeffery S. Sharritts officer: EVP & Chief Cust & Prtnr Offcr 1200 ABERNATHY RD., NE, STE 1200, ATLANTA GA 30328
Maria Martinez officer: EVP, Chief Customer Exp Offcr THE LANDMARK @ 1 MARKET STREET, SUITE 300, SAN FRANCISCO CA 94105
Mark Garrett director 106 EAST BABCOCK STREET SUITE 3A, BOZEMAN MT 59715
Daniel H Schulman director C/O PAYPAL HOLDINGS, INC., 2211 NORTH FIRST STREET, SAN JOSE CA 95131
Roderick C Mcgeary director 1421 MCCRTHY BLVD, MILPITAS CA 95035
Prat Bhatt officer: VP, Corporate Controller & PAO 170 WEST TASMAN DRIVE, SAN JOSE CA 95134
Kristina M Johnson director 19 HEATH PL, DURHAM NC 27705
Sarah Rae Murphy director C/O CISCO SYSTEMS, INC., 170 WEST TASMAN DRIVE, SAN JOSE CA 95134
Geraldine Elliott officer: EVP, Chief Sales & Mktg Offcr 1194 N. MATHILDA AVE., SUNNYVALE CA 94089
M Michele Burns director C/O MARSH &MCLENNAN COMPANIES, INC., 1166 AVENUE OF THE AMERICAS, NEW YORK NY 10036-2774
Mark D Chandler officer: SVP, LglSrvs, GenCnsl & Secty 170 W TASMAN DRIVE, SAN JOSE CA 95134