Body Shop Case Analysis

1. For all the line items that are calculated as a serving of sales, we used an honest for the last terzetto eld as our base case assumptions. Our observations led us to use this average because the percentages were fairly consistent over the last three years. Since the fraternity was non operating at full production capacity we concluded that the company could continue growing without incurring an increase in fixed costs. The dividends were same(predicate) over the period of observation.Since taxes are non calculated as a percentage of sales but rather as a percentage of EBIT, taxes payable remained unchanged. 2. According to our calculations The Body Shop willing need extra funding of ? 16. 97, ? 20. 55, and ? 24. 60 in 2002, 2003 & 2004 respectively for a total of ? 62. 12. These number were derived by developing trial pro-forma balance sheets and finding the difference betwixt our assets and liabilities and equity. This calculation equals the plug, which told us how m uch redundant funding was needed.After forecasting these be we were able to conclude that The Body Shop will need the said(prenominal) funding. 3. Our first important factor that needed to be taking into shape 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 eat up will result in a change in the additional financing 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 customary manager like Roddick would value these findings because it allows her to prepare for future additional financing. Having this prevision will allow her to begin to plan for this newly acquired debt. These findings will realize Roddick two options, she could eit her issue more equity, or she can absorb on additional debt. Our analysis concludes that Roddick should take on new debt totaling ? 16. 97 million for the upcoming fiscal year.