Body Shop Case Analysis

1. For all the line items that are calculated as a ploughshare of sales, we used an average for the last three years as our base case assumptions. Our observations led us to use this average because the voices were pretty consistent oer the last three years. Since the company was not operating(a) at full production capacity we concluded that the company could endure growing without incurring an increase in fixed costs. The dividends were unchanged over the period of observation.Since taxes are not calculated as a percentage of sales but rather as a percentage of EBIT, taxes collectible anticipateed unchanged. 2. According to our numerations The Body Shop entrust need additional championship of ? 16. 97, ? 20. 55, and ? 24. 60 in 2002, 2003 &038 2004 respectively for a total of ? 62. 12. These numbers were derived by developing trial pro-forma balance sheets and finding the difference between our assets and liabilities and equity. This calculation equals the plug, which told us how much additional funding was needed.After forecasting these numbers we were adequate to conclude that The Body Shop exit need the aforementioned funding. 3. Our low gear important factor that needed to be taking into consideration is that the percentage of sales for 2002 will be an average of the previous three years. The next important factor, we believe, is that for 2003 and 2004 the sales percentages will remain unchanged. Lastly, fixed assets will remain the same. With these assumptions in mind, any change up or down will result in a change in the additional financial support needed.The assumptions are key for forecasting future financial data. Without these assumptions we would not be able to accurately predict future values. 4. A general omnibus like Roddick would value these findings because it allows her to prepare for future additional financing. Having this foresight will allow her to begin to plan for this newly acquired debt. These findings will give Roddick cardinal options, she could either issue more equity, or she can take on additional debt. Our analysis concludes that Roddick should take on new debt totaling ? 16. 97 billion for the upcoming fiscal year.