Abstract
Automatic Data Processing is one of the most successful organizations in the digital economy and HR. In order to find out how stable and effective results an organization shows from an economic point of view, it is necessary to analyze the key criteria. In addition, potential forecasts about the income and expenses of the corporation should be made in order to assess the correctness and success of the current vector of development.
Introduction
In order to analyze the corporation from all necessary angles, it is important to consider the profitability of activities and losses. In addition, thanks to forecasting, it is possible to evaluate the current strategy of the company. Automatic Data Processing is certainly a leader in its field, but it would be effective to consider in more detail the potential of the corporation. Therefore, the expenses and incomes of the company will be examined, as well as tentative forecasts about the further development of the financial side will be made.
Forecasted Income Statement
The company increases its income, constantly replenishing the budget from several sources. The main two areas of income are investments of third parties and investors in the company and purchases of securities. It is important to emphasize that the services and products provided by the organization bring less profit. 2017 can be called the most productive year, where Automatic Data Processing (ADP) revenue amounted to $12.4 billion, an increase of 6% compared to the previous year, and net profit also increased from $1.5 billion to $1.7 billion (Yahoo Finance, 2022). According to ADP President and CEO Carlos Rodriguez, the company ended the year with expected results (Wolters Kluwer Editorial Staf, 2021). By analyzing 2022 as in 2021, the company expects a rapid increase in revenue, which is due to the transition to Internet technologies as a result of the recession. In this niche, Automatic Data Processing is a leader, so it is not difficult to monetize success.
Profit and Loss Forecast for 12 Months
It is necessary to consider the annual interval of the corporation’s activity in order to characterize the general situation. During the reporting year, the company collected new orders in the amount of $1.65 billion, which is 5% less than a year ago (Yahoo Finance, 2022). The average salary at the jobs managed by PEO Services reached $462,000 by the end of the year (Yahoo Finance, 2022). However, it is important to single out a serious expense item for the corporation, which can lead to losses (Wolters Kluwer Editorial Staf, 2021). It means the implementation of integrated systems and the development of research in this area. The fact is that Automatic Data Processing does not stop the development and scientific activities in the niche of Internet finance, and in order to improve and study new technologies, large expenses are needed.
4-Year Profit and Loss Forecast
First of all, it is necessary to emphasize that the company is consistently in the leader’s position, which is ensured by a high level of service quality that differs from its closest competitors. From this, it is necessary to conclude that with the successful implementation of the planned projects in the integration of systems and the development of new software, the company’s revenue will increase several times (Wolters Kluwer Editorial Staf, 2021). This is explained by the fact that the corporation has influence among a large number of states that differ significantly both in the systems available and in the level of development (Wolters Kluwer Editorial Staf, 2021). This means getting Automatic Data Processing additional advantages in the market in any case, which will lead to an increase in the number of investors. It is difficult to predict the losses of a firm that consistently covers all costs with net profit. However, in the event of systemic failures in development and a large leakage of technology and employees, one should expect a significant decline in company income within four years.
Sales Forecast and Balance Sheet
Quotes of Automatic Data Processing continue to move within the framework of growth and a bullish channel. The moving averages indicate a short-term bullish trend for the ADP. The potential target of such a movement is the area above the level of 285.05 already in 2021, 2022, and 2023. Cancellation of the growth option for ADP stock quotes will be a fall and a breakdown of the level of 165.05 (CNN Business, 2022). This will indicate a breakdown of the support area and the lower border of the channel, in which case we can consider the continued fall of securities to the area at the level of 115.05 (CNN Business, 2022). Based on the above, the company’s sales will grow over the next two years.
Cash Flow Forecast and Payback Calculation
The automatic Data Processing forecast for 2022 and 2023 suggests the development of a correction and a test of the support area near the level of 185.05. Where should we expect a rebound and an attempt to continue the rise of shares in the area above the level of 285.05 (CNN Business, 2022)? In favor of the growth of securities, a test of the trend line on the relative strength index (RSI) will come out. This will indicate a breakdown of support and a continuation of the fall in value to the area below the level of 115.05 (CNN Business, 2022). Automatic Data Processing Inc. reported first-quarter fiscal year 22 revenue growth of 10% year-over-year to $3.83 billion, beating the consensus estimate of $3.75 billion (CNN Business, 2022). Revenue grew 10% year-over-year on an organic basis in constant currency. Employer services revenue rose 8% yoy to $2.57 billion, and PEO revenue rose 15% yoy to $1.26 billion (CNN Business, 2022). ADP had an operating cash flow of $121.9 million and cash and cash equivalents of $1.6 billion (CNN Business, 2022). This strong start to fiscal 2022 reflects increased demand for all offerings as more employers choose ADP as a partner for their HCM solutions.
References
CNN Business. (2022). Automatic Data Processing Inc. Web.
Wolters Kluwer Editorial Staf. (2021). Directory of corporate counsel. Wolters Kluwer Law & Business.
Yahoo Finance. (2022). Automatic Data Processing, Inc. (ADP). Web.