Question
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 | $12,757.7 |
Operating expenses | 6,431.3 |
Systems development and programming costs | 572.7 |
Depreciation and amortization | 274.0 |
Total cost of revenues | 7,278.0 |
Selling, general, and administrative expenses | 2,757.8 |
Interest expense | 116.9 |
Total expenses | 10,152.7 |
Other (income) expense, net | (100.0) |
Earnings before income taxes | 2,705.0 |
Provision for income taxes | 641.5 |
Net earnings | $2,063.5 |
DATA PROCESSING INC. | |
---|---|
Balance Sheet | |
$ millions | June 30, 2019 |
Current assets | |
Cash and cash equivalents | $1,754.1 |
Accounts receivable, net | 2,195.4 |
Other current assets | 467.6 |
Total current assets before funds held for clients | 4,417.1 |
Funds half for clients | 26,490.8 |
Total current assets | 30,907.9 |
Long-term receivables, net | 21.4 |
Property, plant and equipment, net | 687.8 |
Capitalized contract cost, net | 2,185.7 |
Other assets | 841.0 |
Goodwill | 2,090.7 |
Intangible assets, net | 964.4 |
Total assets | $37,698.9 |
Current liabilities | |
Accounts payable | $113.0 |
Accrued expenses and other current liabilities | 1,583.1 |
Accrued payroll and payroll-related expenses | 649.0 |
Dividends payable | 306.1 |
Short-term deferred revenues | 198.6 |
Obligations under reverse repurchase agreements | 235.8 |
Income taxes payable | 49.3 |
Total current liabilities before client funds obligations | 3,134.9 |
Client funds obligations | 26,230.1 |
Total current liabilities | 29,365.0 |
Long-term debt | 1,802.0 |
Other liabilities | 718.8 |
Deferred income taxes | 593.9 |
Long-term deferred revenues | 359.4 |
Total liabilities | 32,839.1 |
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, 574.8 shares; outstanding 390.8 shares | 57.5 |
Capital in excess of par value | 1,064.9 |
Retained earnings | 15,750.5 |
Treasury stock, at cost: 184.1 shares | (11,781.5) |
Accumulated other comprehensive loss | (231.6) |
Total stockholders' equity | 4,859.8 |
Total liabilities and stockholders' equity | $37,698.9 |
Forecast DPs 2020 income statement and balance sheet using the following relations ($ 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 $166.0 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 2.9% of total revenues and will record amortization expense of $248.5 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 $150.6 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 $1,250.50 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, 574.8 shares; outstanding 390.8 shares | Answer |
Capital in excess of par value | Answer |
Retained earnings | Answer |
Treasury stock, at cost: 184.1 shares | Answer |
Accumulated other comprehensive loss | Answer |
Total stockholders equity | Answer |
Total liabilities and stockholders equity | Answer |
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