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Cash Flow Analysis: There Is An Opportunity For Automatic Data Processing To Improve Its Valuation (NASDAQ:ADP)

Cash Flow Analysis: There Is An Opportunity For Automatic Data Processing To Improve Its Valuation (NASDAQ:ADP)

Automatic Data Processing (ADP) was going strong into 2020 and they laid out plans in their February Investor Day of goals to have 5-6% top-line growth given their new product rollouts, large addressable market, and favorable operating environment. Both the business performance and stock price were hit hard by the COVID-19 pandemic. Although FY20 revenue and margins were slightly higher compared to the previous year, the fourth quarter ended 6/30 was rough as revenue declined and margins compressed. To preserve cash, management put share repurchases on hold. These were reasons why the stock price crumbled from ~$180 per share to ~$140 per share before rebounding to where it is currently trading ~$160 per share. This article will explore ADP’s future cash flows and valuation to see if there is coverage for business operations, expansion, share buybacks, and dividends, and how ADP can expand its premium.

Revenue

ADP had some consistent revenue growth over the last several years. The real outlier was FY20 that was plagued by the pandemic.

Source: Seeking Alpha

The figures outlined in the FY20 Press Release show how the pandemic impacted the fourth quarter (the wavy highlighting was included for emphasis). Bookings were down, retention rate was down, and margins were down. A bright spot is that the business was doing well enough into the second half that they still generated revenue growth.

In February, ADP had its Innovation Day and it laid out its plans for long term of 5-6% per annum. This was to be achieved by continuing to penetrate the addressable market and rolling out products that they spent a bunch of capital on. 2020 was to be the year that these new products were supposed to be scaled and drive incremental revenue. The increase in sales from these products will not be as

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Govt to give cash vouchers to staff in lieu of LTC this year, says Finance Minister Nirmala Sitharaman

Govt to give cash vouchers to staff in lieu of LTC this year, says Finance Minister Nirmala Sitharaman

The Minister has announced a slew of measures to spur spending and stimulate economic demand.

Finance Minister Nirmala Sitharaman unveiled new proposals to stimulate demand in the economy in the wake of the coronavirus pandemic.

Addressing a press conference, Ms. Sitharaman said that she has broadly classified the proposals into two different compartments — consumer spending and capital expenditure.

She said: “There is no gain saying that the pandemic has affected the economy adversely. The needs of the weaker and poor sections have been addressed somewhat in the various packages announced so far. Supply constraints have somewhat eased but consumer demand still needs to be given a bit of a boost. The proposals presented today are defined in such a way — by frontloading some expenditure or advancing some expenditure with some offsetting charges later. The others are directly linked to an increase in the GDP.”

Consumer spending proposals

The Finance Minister said that the consumer spending proposals include a LTC cash vouchers scheme and a special festival advance scheme. The LTC Cash Vouchers scheme is mainly targetted to employees in the government and other organised sectors.

The Minister described the scheme as follows: “Government and many organised sector employees have their jobs and salaries protected and some initial indications suggest savings have increased as many couldn’t spend their usual expenditure during the lockdown.”

She continued: “Central government employees, in a block of four years — between 2017-18 and 2020-21 — employees would have normally availed of one leave travel concession for any destination of their choice plus one visit to their hometown. If they didn’t choose leave travel to one destination of their choice, they would usually go twice to their native village. This would mean air or rail fare as per their pay scale is reimbursed to them.

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Finance Minister introduces LTC Cash Voucher Scheme and Special Festival Advance Scheme makes a one-time comeback

Finance Minister introduces LTC Cash Voucher Scheme and Special Festival Advance Scheme makes a one-time comeback

  • Finance Minister Nirmala Sitharaman introduced two two schemes today to boost consumer spending in the Indian economy — the LTC Cash Voucher Scheme and the Special Festival Advance Scheme.
  • The LTC Cash Voucher Scheme divides the LTC fare component into three flat-rate slabs.
  • The new scheme will let employees use their fare allowance to purchase goods with 12% GST or more.

Finance Minister Nirmala Sitharaman is introducing new proposals to ‘stimulate demand in the economy’. According to her, the government’s previous policies addressed the needs of the poor. This time, the proposals are divided into two categories — consumer spending and capital expenditure.

“Supply constraints have somewhat eased, but consumer demand still needs to be given a bit of a boost,” she said.

Within consumer spending, there are two components — LTC Cash Voucher Scheme and the Special Festival Advance Scheme.

The Special Festival Advance Scheme was a part and parcel of government employees pay package up until the 6th Pay Commission. It’s introduction this year is a one-time come back to boost spending.

Impact of LTC Cash Voucher scheme:
Cost to central government ₹5,675 core
Cost to PSBs and PSUs ₹1,900 crore
Expected demand infusion by central government employees ₹19,000 crore
Expected demand infusion by state government employees ₹9,000 crore
Total expected addition consumer demand generation ₹28,000

“Our estimates are on the conservative side. We expect actual spend to be higher,” said Union Minister Tarun Bajaj.

LTC Cash Voucher SchemeThe new LTC Cash Voucher Scheme divides the LTC fare component into three flat-rate slabs depending on the class on entitlement. Any fare payment will continue to be tax free.

According to Sitharaman, savings have increased due to lockdown especially. “We would like to incentivise them to contribute to the revival of demand for the benefit of the less

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Cash is critical for financial inclusion

Cash is critical for financial inclusion

By Supplied Time of article publishedSep 23, 2020

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Anyone can use cash to transact – important in a country where one in five people do not have a bank account (Finscope, 2018). Cash doesn’t discriminate according to whether you own a smartphone, can get a card from a nearby banking branch or have an ID book for a FICA or Know Your Customer process. It allows immediate participation in the economy for all.

According to the PYMNTS Global Cash Index™ South Africa Analysis, more than 50 percent of consumer transactions are completed with notes and coins. With around R135 billion in cash circulating in the economy and millions of unbanked citizens, the drive towards a cashless society risks harming those it purports to help.

Many financial institutions, technology providers, and payment organisations are motivated in pushing consumers away from using cash and towards using plastic or digital payments channels instead. For many cashless crusaders, the Covid-19 pandemic and the resulting desire for social distancing are the latest arguments against cash.

Some of them tell us that cash is dangerous, expensive and inconvenient – leading to higher economic costs, supporting the underground economy, and exposing people to higher risks of crime. Now, we even hear that coins and paper are a possible virus transmission risk vector. The World Health Organization has since dismissed reports that it said banknotes transmit Covid-19.

Steven Heilbron, the CEO of the Connect Group of Companies says, “The truth is that cash is as safe a payment vehicle as any other. In fact, card and digital payments remain far from contactless. Plastic cards, card terminals and smartphones can also collect pathogens. Whichever of these instruments you use for payment methods, you should wash or sanitise your hands as good hygiene.”

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5 ways freelancers can increase cash flow while their income is down

5 ways freelancers can increase cash flow while their income is down

Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, like American Express, but our reporting and recommendations are always independent and objective.

  • Many freelancers have taken a financial hit since the start of the pandemic, and most government relief has run out.
  • If you need to increase your cash flow to save or pay bills, financial planner Ben Henry-Moreland recommends looking first at your spending to see where you can cut back.
  • Then, look into any government programs that are still available, such as the EIDL, and consider reducing your health insurance costs if you’re able.
  • You can also reach out to your network to get more work, and reduce your quarterly tax payments to the IRS if your income has gone down.
  • Get Personal Finance Insider’s free guide to financial planners »

If you’re a freelancer like I am, you know just how hard it can be to manage your money. For one thing, budgeting on an inconsistent income is like taming a beast in the wild. And  trying to save? That can feel like a lofty aspiration to spot Big Foot. Take into account the financial curveball that the pandemic has thrown at us, and it makes saving that much more challenging.

Now that some of the government-funded programs made available to self-employed folks because of COVID-19, namely the Paycheck Protection Program and expanded unemployment benefits, have lapsed, freelancers might feel even more squeezed financially. So how can you save — or even just meet your basic financial needs — despite all these hurdles?

Ben Henry-Moreland, a financial planner and founder of Freelance Financial Planning, has some advice.

Focus on your spending 

The only way to manage inconsistent income is

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