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Question 1 Partially correct Mark 24.00 out of 48.00 V Flag question Analyze, Forecast, and Interpret Income Statement and Balance Sheet Following are the income statement and balance sheet of DP Inc. DATA PROCESSING INCt Statement of Consolidated Earnings For Year Endedjune 30, 2019, $ millions Total revenues $113402 Operating expenses ' 5,716.7 Systems development and programming costs ' SO90 Depreciation and amortization ' 243.5 Total cost of revenues ' 6,4692 Selling, general, and administrative expenses ' 2,451.4 Interest expense 103.9 Total expenses 7 . 7 V . V W . 9,024.5 Other (income) expense, net (88.9) Earnings before income taxes 2,404.6 Provision for income taxes 570.2 Net earnings 31,8344 DATA PROCESSING INC. Balance Sheet smillions June 30,2019 Current assets ' Cash and cash equivalents ' 51,5595 Accounts receivable, net ' 1,951.4 Other current assets ' 4157 Total current assets before funds held for clients ' 3,926.6 Funds half for clients ' 23,5414 Total current assets ' 27,4740 Long~term receivables, net ' 19.0 Property, plant and equipment, niet H W ' W 6114 Capitalized contract cost, net ' 1,942.8 Other assets 7475 Goodwill 1,858.4 Intangible assets, net 8572 Total assets $335103 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 2096 Income taxes payable 43.8 Total current liabilities before client funds obligations 2,786.6 Client funds obligations 23,315.6 Total current liabilities 26,1022 Long-term debt 1,601.8 Other liabilities 639.0 Deferred income taxes 527.9 Long-term deferred revenues 319.4 Total liabilities 29,1903 Shareholders' equity Preferred stock, $1.00 parvalue; 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 parvalue 946.6 Retained earnings 14,0005 Treasury stock, at cost: 163.6 shares (10,4724) Accumulated other comprehensive loss (205.8) Total stockholders' equity 4,320.0 Total liabilities and stockholders' equity $335103 Forecast DP's 2020 income statement and balance sheet using the following relations (35 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% oftotal 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 $1.1 11.50 in 2020, and dividends payable will be 26.3% of dividends. Note: Round your answers to one decimal place (for example, enter 14.6 for 14.55555). DATA PROCESSING, INC. Forecasted Income Statement For Year Ended June 30, 2020 S millions Forecast Total Revenues 12814.4 vi Operating expenses ' 6,459.9 V' Systems development & programming costs ' 575 vi Depreciation and Amortization ' 368.4 I Total cost of revenues ' 7,403.3 V' Selling, general, and administrative expenses ' 2,770,082 xl Interest expense ' 103.9 I Total Expenses ' 10,2773 V' Other (income)/expense, net (10 457) 3: Earnings before income taxes 2 54 54 x Provision forincome taxes ' 663.714 3\" Net Earnings ls 1,991,141 xl DATA PROCESSING, INC. Forecasted Balance Sheet June 30, 2020 $ millions Forecast Current assets I ' Cash and cash equivalents |$ 2,278,632 xi Accounts receivable, net 2,205 v Other current assets 469.741 X Total current assets before funds held for clients 4.953.455 X Funds held for clients 26,608.562 X Total current assets 31,562.017 X Long-term receivables, net 2147 X Property, plant and equipment, net 604 v Capitalized Contract Cost, Net 2.195.963 X Other assets 844.675 v Goodwill 1,858.4 o/ Intangible assets, net 1,007 v Total assets 3 38,095.042 X Current liabilities Accounts payable 113.5 Accrued expenses and other current liabilities 1,590.1 v Accrued payroll and payroll-related expenses 651.9 o/ Dividends payable 292.3 v Short-term deferred revenues 199.558 X Obligations under reverse repo agreements 836.848 X Income taxes payable 49.494 v Total current liabilities before client funds obligations 3,495.2 X Client funds obligations 26346.6 v Total current liabilities 3.733.677 X Long-term debt 1,601.8 v Other liabilities 722.07 X Deferred income taxes 596.527 X Long-term deferred revenues 360.9 X Total liabilities 3 33,330.464 X Shareholders' equity: Preferred stock, $1.00 par value: Authorized, 0.3 shares; issued, none 0 v Common stock, $0.10 par value: authorized, 1,000.0 shares; issued, 511.0 shares; outstanding 347.4 shares 51.1 v Capital in excess of par value 1,080 v Retained earnings 14,880,141 X Treasury stock, at cost: 1615 shares (11,0724) v Accumulated other comprehensive loss (205) v Total stockholders' equity 4,733.441 at Total liabilities and stockholders' equity :5 38,095.042 X