Analyze, Forecast, and Interpret Income Statement and Balance Sheet

Following are the income statement and balance sheet of ADP Inc.

DATA PROCESSING INC.

Statement of Consolidated Earnings

For Year Ended June $30,2019,$ $ millions

Total revenues $$12,757\mathrm{.}7$

Operating expenses $6,431\mathrm{.}3$

Systems development and programming costs $572\mathrm{.}7$

Depreciation and amortization $274\mathrm{.}0$

Total cost of revenues $7,278\mathrm{.}0$

Selling, general, and administrative expenses $2,757\mathrm{.}8$

Interest expense $116\mathrm{.}9$

Total expenses $10,152\mathrm{.}7$

Other $($income$)$ expense, net $(100\mathrm{.}0)$

Earnings before income taxes $2,705\mathrm{.}0$

Provision for income taxes $641\mathrm{.}5$

Net earnings $$2,063\mathrm{.}5$

DATA PROCESSING INC.

Balance Sheet

$ millions June $30,2019$

Current assets

Cash and cash equivalents $$1,754\mathrm{.}1$

Accounts receivable, net $2,195\mathrm{.}4$

Other current assets $467\mathrm{.}6$

Total current assets before funds held for clients $4,417\mathrm{.}1$

Funds half for clients $26,490\mathrm{.}8$

Total current assets $30,907\mathrm{.}9$

Long$-$term receivables, net $21\mathrm{.}4$

Property, plant and equipment, net $687\mathrm{.}8$

Capitalized contract cost, net $2,185\mathrm{.}7$

Other assets $841\mathrm{.}0$

Goodwill $2,090\mathrm{.}7$

Intangible assets, net $964\mathrm{.}4$

Total assets $$37,698\mathrm{.}9$

Current liabilities

Accounts payable $$113\mathrm{.}0$

Accrued expenses and other current liabilities $1,583\mathrm{.}1$

Accrued payroll and payroll$-$related expenses $649\mathrm{.}0$

Dividends payable $306\mathrm{.}1$

Short$-$term deferred revenues $198\mathrm{.}6$

Obligations under reverse repurchase agreements $235\mathrm{.}8$

Income taxes payable $49\mathrm{.}3$

Total current liabilities before client funds obligations $3,134\mathrm{.}9$

Client funds obligations $26,230\mathrm{.}1$

Total current liabilities $29,365\mathrm{.}0$

Long$-$term debt $1,802\mathrm{.}0$

Other liabilities $718\mathrm{.}8$

Deferred income taxes $593\mathrm{.}9$

Long$-$term deferred revenues $359\mathrm{.}4$

Total liabilities $32,839\mathrm{.}1$

Shareholders' equity

Preferred stock, $$1\mathrm{.}00$ par value; Authorized, $0\mathrm{.}3$ shares; issued $,$ none

Common stock, $$0\mathrm{.}10$ par value; Authorized, $1,000\mathrm{.}0$ shares;

issued, $574\mathrm{.}8$ shares; outstanding $390\mathrm{.}8$ shares $57\mathrm{.}5$

Capital in excess of par value $1,064\mathrm{.}9$

Retained earnings $15,750\mathrm{.}5$

Treasury stock, at cost: $184\mathrm{.}1$ shares $(11,781\mathrm{.}5)$

Accumulated other comprehensive loss $(231\mathrm{.}6)$

Total stockholders' equity $4,859\mathrm{.}8$

Total liabilities and stockholders' equity $$37,698\mathrm{.}9$

Assume total revenues grow by $13\%$ in $2020.$ All other percentages $($other than sales growth and provision for income taxes$)$ are based on historic percent of total revenues.

CAPEX for $2020$ will be $1\mathrm{.}1\%$ of total revenue, and depreciation will be $$166\mathrm{.}0$ million.

Goodwill, long$-$term debt, preferred stock, common stock, and Accumulated other comprehensive loss will not change for the year.

The company will acquire intangibles equal to $2\mathrm{.}9\%$ of total revenues and will record amortization expense of $$248\mathrm{.}5$ million.

Income taxes will be $25\%$ of pretax income and income taxes payable will be $7\mathrm{.}7\%$ of $2020$ tax expense.

The company will award $$150\mathrm{.}6$ million of stock$-$based compensation, which increases Capital in excess of par value by the same amount. Assume that the company routinely includes this form of compensation in operating expenses each year.

The company will continue its stock repurchases. DP will repurchase $$675$ million of treasury stock.

Dividends will be $$1,250\mathrm{.}50$ in $2020,$ and dividends payable will be $26\mathrm{.}3\%$ of dividends.

Prepare a forecast of FY$2020$ statement of cash flows.

Note: Round your answers to one decimal place $($for example, enter $14\mathrm{.}6$ for $14\mathrm{.}55555).$

AUTOMATIC DATA PROCESSING, INC.

Forecasted Statement of Cash Flows

For Year Ended

$ millions June $2020$

Net income $($loss$)$ Answer

Add: Depreciation Answer

Add: Amortization Answer

Add: Stock based compensation Answer

Accounts receivable, net Answer

Other current assets Answer

Funds held for clients Answer

Long$-$term receivables, net Answer

Capitalized Contract Cost, Net Answer

Other assets Answer

Accounts payable Answer

Accrued expenses and other current liabilities Answer

Accrued payroll and payroll$-$related expenses Answer

Short$-$term deferred revenues Answer

Obligations under reverse repurchase agreements Answer

Income taxes payable Answer

Client funds obligations Answer

Other liabilities Answer

Deferred income taxes Answer

Long$-$term deferred revenues Answer

Operating cash flow Answer

Capital Expenditures Answer

Additional intangibles acquired Answer

Net cash from investing activities Answer

Dividends Answer

Dividends payable Answer

Stock buy backs Answer

Net cash from financing activities Answer

Net change in cash Answer

Beginning cash Answer

Ending cash Answer