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Analyze, Forecast, and Interpret Income Statement and Balance Sheet Following are the income statement and balance sheet of DP Inc. DATA PROCESSING INC. Statement of

Analyze, Forecast, and Interpret Income Statement and Balance Sheet Following are the income statement and balance sheet of DP Inc.

DATA PROCESSING INC.
Statement of Consolidated Earnings
For Year Ended June 30, 2019, $ millions
Total revenues $11,340.2
Operating expenses 5,716.7
Systems development and programming costs 509.0
Depreciation and amortization 243.5
Total cost of revenues 6,469.2
Selling, general, and administrative expenses 2,451.4
Interest expense 103.9
Total expenses 9,024.5
Other (income) expense, net (88.9)
Earnings before income taxes 2,404.6
Provision for income taxes 570.2
Net earnings $1,834.4

DATA PROCESSING INC.
Balance Sheet
$ millions June 30, 2019
Current assets
Cash and cash equivalents $1,559.5
Accounts receivable, net 1,951.4
Other current assets 415.7
Total current assets before funds held for clients 3,926.6
Funds half for clients 23,547.4
Total current assets 27,474.0
Long-term receivables, net 19.0
Property, plant and equipment, net 611.4
Capitalized contract cost, net 1,942.8
Other assets 747.5
Goodwill 1,858.4
Intangible assets, net 857.2
Total assets $33,510.3
Current liabilities
Accounts payable $100.4
Accrued expenses and other current liabilities 1,407.2
Accrued payroll and payroll-related expenses 576.9
Dividends payable 272.1
Short-term deferred revenues 176.6
Obligations under reverse repurchase agreements 209.6
Income taxes payable 43.8
Total current liabilities before client funds obligations 2,786.6
Client funds obligations 23,315.6
Total current liabilities 26,102.2
Long-term debt 1,601.8
Other liabilities 639.0
Deferred income taxes 527.9
Long-term deferred revenues 319.4
Total liabilities 29,190.3
Shareholders' equity
Preferred stock, $1.00 par value; Authorized, 0.3 shares; issued , none
Common stock, $0.10 par value; Authorized, 1,000.0 shares;
issued, 511.0 shares; outstanding 347.4 shares 51.1
Capital in excess of par value 946.6
Retained earnings 14,000.5
Treasury stock, at cost: 163.6 shares (10,472.4)
Accumulated other comprehensive loss (205.8)
Total stockholders' equity 4,320.0
Total liabilities and stockholders' equity $33,510.3

Forecast DPs 2020 income statement and balance sheet using the following relations ($ millions). 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 1.1% of total revenue, and depreciation will be $147.5 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 2.9% of total revenues and will record amortization expense of $220.9 million.
  • Income taxes will be 25% of pretax income and income taxes payable will be 7.7% of 2020 tax expense.
  • The company will award $133.8 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 $600 million of treasury stock.
  • Dividends will be $1,111.50 in 2020, and dividends payable will be 26.3% of dividends.

Note: When you are required to compute the percentage used for your forecasting assumptions, round the percentage to one decimal place and use that rounded figure to compute the forecasted amount. For example, assume that Actual Accounts receivable, net divided Actual Total revenues equals 0.1720824. This factor should be rounded to 17.2% before computing your forecasted amount for Accounts receivable, net. Note: Round your forecasted answers to one decimal place (for example, enter 14.6 for 14.55555). Use rounded amounts to compute any subtotals and totals.

DATA PROCESSING, INC.
Forecasted Income Statement
For Year Ended June 30, 2020
$ millions Forecast
Total Revenues Answer
Operating expenses Answer
Systems development & programming costs Answer
Depreciation and Amortization Answer
Total cost of revenues Answer
Selling, general, and administrative expenses Answer
Interest expense Answer
Total Expenses Answer
Other (income)/expense, net Answer
Earnings before income taxes Answer
Provision for income taxes Answer
Net Earnings Answer

DATA PROCESSING, INC.
Forecasted Balance Sheet
June 30, 2020
$ millions Forecast
Current assets
Cash and cash equivalents Answer
Accounts receivable, net Answer
Other current assets Answer
Total current assets before funds held for clients Answer
Funds held for clients Answer
Total current assets Answer
Long-term receivables, net Answer
Property, plant and equipment, net Answer
Capitalized Contract Cost, Net Answer
Other assets Answer
Goodwill Answer
Intangible assets, net Answer
Total assets Answer
Current liabilities
Accounts payable Answer
Accrued expenses and other current liabilities Answer
Accrued payroll and payroll-related expenses Answer
Dividends payable Answer
Short-term deferred revenues Answer
Obligations under reverse repo agreements Answer
Income taxes payable Answer
Total current liabilities before client funds obligations Answer
Client funds obligations Answer
Total current liabilities Answer
Long-term debt Answer
Other liabilities Answer
Deferred income taxes Answer
Long-term deferred revenues Answer
Total liabilities Answer
Shareholders equity:
Preferred stock, $1.00 par value: Authorized,
0.3 shares; issued, none Answer
Common stock, $0.10 par value: authorized, 1,000.0 shares;
issued, 511.0 shares; outstanding 347.4 shares Answer
Capital in excess of par value Answer
Retained earnings Answer
Treasury stock, at cost: 163.6 shares Answer
Accumulated other comprehensive loss Answer
Total stockholders equity Answer
Total liabilities and stockholders equity Answer

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