Cisco Systems Inc. (NASDAQ:CSCO)

Goodwill

The goodwill value demonstrates a consistent upward trend from 33,806 million USD in 2020 to 59,136 million USD in 2025, with a notable increase between 2023 and 2024 where the figure jumps from 38,535 to 58,660 million USD, indicating significant acquisitions or revaluations during this period.

Customer Related Intangibles

This category shows growth from 760 million USD in 2020 to a peak of 1,387 million USD in 2021, followed by a decline to 1,228 million USD in 2023 and then a substantial rise to 6,844 million USD in 2024 before decreasing slightly to 6,341 million USD in 2025, suggesting cyclical changes possibly linked to acquisition-related intangibles or changing customer asset valuations.

Technology Intangibles

The recorded values initially increase from 3,298 million USD in 2020 to 3,629 million USD in 2021, then decline to 2,631 million USD in 2022. It partially recovers to 2,998 million USD in 2023 before sharply increasing to 6,680 million USD in 2024 and dropping to 5,254 million USD in 2025. This pattern points to volatile investment or valuation related to technology assets.

Trade Name

This item appears only in 2024 and 2025, with values of 553 million USD and 526 million USD respectively, indicating the recognition of a new or previously unrecorded intangible asset class linked to brand or trade names in these years.

Other Intangibles

Values here fluctuate with a low base: 26 million USD in 2020, peaking at 71 million USD in 2021, then returning to around 40 million USD in subsequent years before data becomes unavailable, implying minor or inconsistent intangible asset recognition in this category.

Purchased Intangible Assets with Finite Lives, Gross

This asset category trends irregularly: increasing from 4,084 million USD in 2020 to 5,087 million USD in 2021, falling back to 4,026 million USD in 2022, slight rise to 4,266 million USD in 2023, followed by a sharp spike to 14,077 million USD in 2024 and a slight reduction to 12,121 million USD in 2025, reflecting substantial acquisitions or revaluations in the later period.

Accumulated Amortization

Accumulated amortization shows a decreasing negative balance from -2,721 million USD in 2020 to -1,873 million USD in 2022, but then deepens again to -2,946 million USD by 2025. This indicates fluctuating amortization charges, potentially reflecting new intangible asset acquisitions or changes in amortization schedules.

Purchased Intangible Assets with Finite Lives, Net

The net figure mirrors the gross figure's volatility but with a declining trend after 2021. It increases from 1,363 million USD in 2020 to 3,114 million USD in 2021, then decreases to 2,139 million USD in 2022 and further to 1,648 million USD in 2023, before sharply rising to 11,193 million USD in 2024 and decreasing again to 9,175 million USD in 2025, indicating significant amortization or disposals offset by major acquisitions.

In-Process Research and Development (Indefinite Lives)

There is a peak at 505 million USD in 2021, after which this asset declines steadily to 170 million USD by 2023 and drops to 26 million USD by 2024, with no data reported for 2025. This suggests that ongoing projects are either completed, reclassified, or impaired over time.

Purchased Intangible Assets

Overall purchased intangible assets rise from 1,576 million USD in 2020 to a high of 11,219 million USD in 2024, before falling to 9,175 million USD in 2025, reflecting the impact of significant acquisitions combined with amortization or write-downs in the later years.

Total Goodwill and Purchased Intangible Assets

The total combined value increases notably from 35,382 million USD in 2020 to 69,879 million USD in 2024, slightly decreasing to 68,311 million USD in 2025. The marked increase from 2023 to 2024 signals major acquisition activity or asset revaluation contributing to the company's intangible asset base.

Total Assets

The reported total assets show an overall increasing trend from 94,853 million USD in 2020 to a peak of 124,413 million USD in 2024, followed by a slight decrease to 122,291 million USD in 2025. In contrast, the adjusted total assets exhibit a declining trend over the same period, falling from 61,047 million USD in 2020 to 55,698 million USD in 2022, then recovering to 65,753 million USD in 2024 before decreasing again to 63,155 million USD in 2025. This divergence suggests that adjustments, likely related to goodwill, significantly reduce the asset base and introduce volatility not reflected in the reported figures.

Equity

Reported equity demonstrates a consistent growth trajectory, rising from 37,920 million USD in 2020 to 46,843 million USD in 2025, indicating strengthening shareholder value under reported accounting measures. Conversely, adjusted equity presents a markedly different pattern, starting at 4,114 million USD in 2020 and declining sharply to 1,469 million USD by 2022. Despite a temporary rebound to 5,818 million USD in 2023, the adjusted equity turns negative in 2024 (-13,203 million USD) and remains negative (-12,293 million USD) in 2025. The negative adjusted equity in the latter years points to substantial goodwill impairments or other adjustments that erode the net asset value, signaling potential concerns over asset quality and sustainability under adjusted accounting standards.

Overall Insights

The data reveal a pronounced contrast between reported and adjusted financial metrics. While reported figures suggest steady growth in both assets and equity, the adjusted data paint a more cautious picture, reflecting reductions in asset base and significant declines in equity, culminating in negative adjusted equity in the most recent years. This disparity likely arises from the accounting treatment of goodwill and other intangible assets, emphasizing the importance of analyzing adjusted figures for a more conservative and potentially risk-aware assessment of financial health. The negative adjusted equity particularly raises questions about underlying asset impairments and may warrant further investigation into the quality of reported earnings and asset valuations.

Total Asset Turnover

Reported total asset turnover exhibited a relatively stable trend from 2020 to 2023, ranging narrowly between 0.51 and 0.56 before declining notably to 0.43 in 2024 and slightly recovering to 0.46 in 2025. Meanwhile, the adjusted total asset turnover shows a generally higher and more volatile pattern, increasing from 0.81 in 2020 to 0.93 in 2022, dipping to 0.9 in 2023, then decreasing further to 0.82 in 2024 before climbing back to 0.9 in 2025. This suggests that when goodwill adjustments are accounted for, asset efficiency appears stronger but with more pronounced fluctuations.

Financial Leverage

Reported financial leverage steadily decreased from 2.5 in 2020 to 2.3 in 2023, indicating a moderate reduction in leverage, before rising to 2.74 in 2024 and slightly decreasing again to 2.61 in 2025. Adjusted financial leverage shows extreme volatility, spiking sharply from 14.84 in 2020 to an unusually high 37.92 in 2022, then sharply declining to 10.88 in 2023 and missing data thereafter. This discrepancy indicates that goodwill significantly distorts leverage metrics, leading to much higher and less stable leverage ratios when adjusted.

Return on Equity (ROE)

The reported ROE demonstrates a generally downward trend from 29.57% in 2020 to 21.73% in 2025, with minor fluctuations, notably a slight rise in 2022 and 2023. The adjusted ROE, however, is characterized by extremely high values and volatility, starting at 272.58% in 2020, peaking at 804.08% in 2022, then falling sharply to 216.79% in 2023, with no data available for subsequent years. This substantial divergence suggests that goodwill greatly inflates equity returns, complicating straightforward interpretation of profitability on an adjusted basis.

Return on Assets (ROA)

Reported ROA shows a gradual decline from 11.82% in 2020 to 8.32% in 2025, with a slight dip in 2024. The adjusted ROA also follows a generally declining trend, starting from 18.37% in 2020, peaking at 21.21% in 2022, then decreasing to 16.12% in 2025. Although adjusted ROA values are consistently higher than reported figures, both measures reflect a diminishing ability to generate returns from assets over the observed period, albeit with sporadic improvements.

Total Assets

The reported total assets show an overall increasing trend from 94,853 million US dollars in 2020 to a peak of 124,413 million US dollars in 2024, followed by a slight decrease to 122,291 million US dollars in 2025. This indicates asset growth over the period with some consolidation or asset reduction in the final year.

In contrast, the adjusted total assets, which likely remove goodwill or intangible assets, exhibit a declining trend from 61,047 million US dollars in 2020 to 55,698 million US dollars in 2022. Following this decline, there is an increase to 65,753 million US dollars in 2024 before a subsequent decrease to 63,155 million US dollars in 2025. This pattern suggests fluctuations in underlying asset base excluding goodwill, with a recovery phase mid-period and a slight decrease toward the end.

Total Asset Turnover

The reported total asset turnover ratio remains relatively stable between 0.51 and 0.56 from 2020 through 2023, indicating consistent efficiency in generating revenue from reported assets during this time. However, a noticeable decline occurs in 2024 dropping to 0.43, with a modest rebound to 0.46 in 2025. This decline could reflect operational challenges or increased asset base not yet translating into proportionally higher revenues.

When adjusted for goodwill, the total asset turnover ratio demonstrates generally higher values, starting at 0.81 in 2020 and peaking at 0.93 in 2022. These higher ratios suggest better efficiency when goodwill is excluded from the asset base. Although there is a slight decrease to 0.82 in 2024, the ratio recovers to 0.90 in 2025, indicating a relatively stable ability to generate revenue from core assets after adjustment.

Key Observations

The divergence between reported and adjusted total assets indicates significant goodwill or intangible assets on the balance sheet, which impact reported totals but are excluded in adjustments. This disparity affects the apparent asset turnover ratios, with adjusted metrics demonstrating higher turnover and therefore stronger operational performance excluding goodwill.

The peak and subsequent decrease in reported assets in 2024-2025, coupled with the asset turnover ratio decline in the same period, suggests that recent asset increases may not be fully productive or efficiently employed.

The adjusted total assets and turnover trends imply that the company has maintained efficient use of its core asset base, despite fluctuations in intangible asset valuation or composition.

Asset Trends

The reported total assets exhibited a general upward trend from 94,853 million USD in 2020 to a peak of 124,413 million USD in 2024, followed by a slight decline to 122,291 million USD in 2025. Conversely, the adjusted total assets, which exclude goodwill, demonstrated a declining pattern from 61,047 million USD in 2020 to 55,698 million USD in 2022, then increased to 65,753 million USD in 2024 before moderately decreasing to 63,155 million USD in 2025. This divergence suggests that goodwill or other intangible assets significantly influenced the reported asset values, especially notable in the latter years.

Equity Patterns

Reported equity consistently increased over the six-year period, rising from 37,920 million USD in 2020 to 46,843 million USD in 2025. Adjusted equity, however, showed a starkly different course, starting at 4,114 million USD in 2020 and declining to 1,469 million USD in 2022 before increasing to 5,818 million USD in 2023, then falling sharply into negative territory at -13,203 million USD and -12,293 million USD in 2024 and 2025, respectively. The negative adjusted equity in recent years indicates that, after removing goodwill, liabilities potentially exceeded adjusted assets, which may raise concerns about net asset quality when intangible assets are excluded.

Financial Leverage Analysis

Reported financial leverage ratios decreased from 2.5 in 2020 to 2.3 in 2023, signaling a modest reduction in leverage, before increasing to 2.74 in 2024 and slightly decreasing again to 2.61 in 2025. The adjusted financial leverage ratio, calculated excluding goodwill, displayed more volatility, starting high at 14.84 in 2020, increasing sharply to 37.92 in 2022, and then dropping substantially to 10.88 in 2023; values for 2024 and 2025 were unavailable. This extreme fluctuation in adjusted leverage highlights the significant impact goodwill has on the company’s capital structure, and the lower adjusted equity base leads to comparatively high leverage ratios when goodwill is excluded.

General Insights

The data reveals considerable differences between reported and adjusted figures, predominantly due to the treatment of goodwill. While reported figures portray steady asset and equity growth alongside relatively stable leverage, adjusted figures illuminate potential underlying financial risk areas, such as negative adjusted equity and substantially elevated leverage ratios. These discrepancies suggest the company carries a significant goodwill asset base, and analysts should carefully consider the quality and impairment risk of these intangibles when evaluating financial health and capital structure stability.

The data reveals several notable trends in the equity positions and return on equity (ROE) metrics over the examined periods.

Reported Equity

The reported equity steadily increased from 37,920 million US$ in 2020 to 46,843 million US$ in 2025. This represents a generally positive growth trend over the six years, with the most significant increases observed between 2021 and 2023, followed by more moderate increases thereafter.

Adjusted Equity

The adjusted equity, which accounts for goodwill adjustments, displayed substantial volatility over the same period. It started at 4,114 million US$ in 2020, then declined sharply to 1,469 million US$ in 2022, before experiencing a rebound to 5,818 million US$ in 2023. However, the metric turned negative in 2024 (-13,203 million US$) and remained negative in 2025 (-12,293 million US$). This pattern suggests significant impairments or write-downs related to goodwill affecting the adjusted equity negatively in the recent years.

Reported Return on Equity (ROE)

The reported ROE shows a general decline from 29.57% in 2020 to 21.73% in 2025. Despite some fluctuations—with a dip in 2021 followed by a slight recovery through 2022 and 2023—the overall trend is downward, indicating decreasing profitability relative to shareholders' equity.

Adjusted Return on Equity (ROE)

The adjusted ROE, which presumably factors out the effects of goodwill, exhibits extreme volatility and unusually high values in the early years: 272.58% in 2020, peaking at 804.08% in 2022, and then declining sharply to 216.79% in 2023. Data for 2024 and 2025 are unavailable. The high and fluctuating adjusted ROE values could reflect the disproportionately small or negative adjusted equity base, which magnifies the return measure, making it less reliable as a standalone indicator in these periods.

In summary, while the company's reported equity base has shown steady growth, the adjustment for goodwill reveals significant impairments leading to negative adjusted equity in recent years. Concurrently, reported ROE indicates diminishing shareholder returns, whereas adjusted ROE's instability suggests caution in interpretation due to extreme base effects and lack of data continuity in the latest years.

The analysis of the annual financial data reflecting reported and goodwill adjusted figures reveals several notable trends over the observed periods.

Total Assets

The reported total assets demonstrate a general upward trajectory from 94,853 million US dollars in 2020 to a peak of 124,413 million in 2024, followed by a slight decline to 122,291 million in 2025. This suggests the company expanded its asset base significantly over the first five years before a minor contraction. In contrast, the adjusted total assets, which presumably exclude goodwill, show a decreasing trend from 61,047 million in 2020 to 55,698 million in 2022. Subsequently, adjusted assets rose to 65,753 million by 2024 before declining again slightly in 2025 to 63,155 million. This pattern indicates fluctuations in underlying asset values excluding goodwill, highlighting potential asset revaluations or disposals during this period.

Return on Assets (ROA)

Reported ROA exhibited a declining pattern from 11.82% in 2020 to 10.86% in 2021. It recovered somewhat to 12.57% in 2022 and held relatively steady through 2023 at 12.38%, before declining sharply to 8.29% in 2024 and remaining stable at 8.32% in 2025. This indicates that the company's efficiency in generating net income from its reported assets weakened notably in the latter years despite earlier stability.

Adjusted ROA, which excludes the effect of goodwill, follows a somewhat parallel but higher trend compared to the reported ROA. Starting at 18.37% in 2020, it experienced a mild decrease to 17.85% in 2021, then peaked significantly at 21.21% in 2022. Afterward, it declined to 19.92% in 2023 and further dropped to approximately 15.7% in 2024 before slightly improving to 16.12% in 2025. This suggests that when goodwill is excluded, the underlying asset base is generating returns more efficiently, although there has been some recent erosion in performance.

Overall, the data reflects an expansion in the company's total asset base, particularly when goodwill is included, though adjusted assets have been more volatile. Returns on assets indicate a higher profitability relative to adjusted assets than to reported figures, signaling the impact of goodwill on reported returns. Nevertheless, both measures show a declining trend in profitability in the most recent years, which could warrant further investigation into operational efficiency or asset utilization strategies.