In financial accounting and auditing, determining the threshold level of materiality requires that an appropriate base level and percentage be decided on. Traditionally the financial community refers to accounting variables such as net income (before taxes) or earnings, revenue, total assets and total debt/equity as benchmarks.
The materiality threshold is defined as a percentage of that base. The most commonly used base in auditing is net income (earnings / profits).
Most commonly percentages are in the range of 5 – 10 percent (for example an amount <5% = immaterial, > 10% material and 5-10% requires judgment).
Cisco's Net Income FY ending 07/31/2021 = $10,591 (in millions) so $10,591,000,000.
1% of 10.591B ~ $106,000,000 2% of 10.591B ~ $212,000,000 3% of 10.591B ~ $318,000,000 4% of 10.591B ~ $424,000,000 5% of 10.591B ~ $530,000,000 6% of 10.591B ~ $636,000,000 7% of 10.591B ~ $742,000,000
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