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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

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 $14,175.2
Operating expenses 7,145.9
Systems development and programming costs 636.3
Depreciation and amortization 304.4
Total cost of revenues 8,086.6
Selling, general, and administrative expenses 3,064.2
Interest expense 129.9
Total expenses 11,280.7
Other (income) expense, net (111.1)
Earnings before income taxes 3,005.6
Provision for income taxes 712.8
Net earnings $2,292.8

DATA PROCESSING INC.
Balance Sheet
$ millions June 30, 2019
Current assets
Cash and cash equivalents $1,949.2
Accounts receivable, net 2,439.3
Other current assets 519.6
Total current assets before funds held for clients 4,908.1
Funds half for clients 29,434.2
Total current assets 34,342.3
Long-term receivables, net 23.8
Property, plant and equipment, net 764.2
Capitalized contract cost, net 2,428.5
Other assets 934.4
Goodwill 2,323.0
Intangible assets, net 1,071.5
Total assets $41,887.7
Current liabilities
Accounts payable $125.5
Accrued expenses and other current liabilities 1,759.0
Accrued payroll and payroll-related expenses 721.1
Dividends payable 340.1
Short-term deferred revenues 220.7
Obligations under reverse repurchase agreements 262.0
Income taxes payable 54.8
Total current liabilities before client funds obligations 3,483.2
Client funds obligations 29,144.5
Total current liabilities 32,627.7
Long-term debt 2,002.2
Other liabilities 798.7
Deferred income taxes 659.9
Long-term deferred revenues 399.3
Total liabilities 36,487.8
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, 638.7 shares; outstanding 434.2 shares 63.9
Capital in excess of par value 1,183.2
Retained earnings 17,500.6
Treasury stock, at cost: 204.5 shares (13,090.5)
Accumulated other comprehensive loss (257.3)
Total stockholders' equity 5,399.9
Total liabilities and stockholders' equity $41,887.7

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 $184.4 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 $276.1 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 $167.3 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 $750 million of treasury stock.
  • Dividends will be $1,389.40 in 2020, and dividends payable will be 26.3% of dividends.

Prepare a forecast of FY2020 statement of cash flows. Note: Round your answers to one decimal place (for example, enter 14.6 for 14.55555).

AUTOMATIC DATA PROCESSING, INC.
Forecasted Statement of Cash Flows
For Year Ended
$ millions June 2020
Net income (loss)

Add: Depreciation

Add: Amortization

Add: Stock based compensation

Accounts receivable, net

Other current assets

Funds held for clients

Long-term receivables, net

Capitalized Contract Cost, Net

Other assets

Accounts payable

Accrued expenses and other current liabilities

Accrued payroll and payroll-related expenses

Short-term deferred revenues

Obligations under reverse repurchase agreements

Income taxes payable

Client funds obligations

Other liabilities

Deferred income taxes

Long-term deferred revenues

Operating cash flow

Capital Expenditures

Additional intangibles acquired

Net cash from investing activities

Dividends

Dividends payable

Stock buy backs

Net cash from financing activities

Net change in cash

Beginning cash

Ending cash

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