Here is Cisco’s 2013 Income statement
If you see, they calculate Net Income without subtracting Depreciation. They do have Depreciation - it’s considering in the Statement of Cashflows - they add Depreciation back to Net Income while calculating Cash Flow from operations.
What am I missing here?
This is a very common issue as many companies do not break out their depreciation and amortization on the income statement. In this case Cisco most likely is embedding their depreciation and amortization expense in Cost of Sales as well as General and Administrative expense. I did not see any detail in the footnotes with the allocation between the two.
Because depreciation is embedeed into the COGS and SGA. So it is still captured, just not broken out separately.
Thank you, guys
It is incorrect to describe Cisco’s presentation as an “issue”. Cisco presents its expense by “function of expense” method, which is one of the two acceptable presentation methods. The other method, where depreciation is separately shown, is called “nature of expense” method.