Last Updated 07 Jul 2020

Body Shop Case Analysis

Category Shop, Tax
Essay type Analysis
Words 336 (2 pages)
Views 15

1. For all the line items that are calculated as a percentage 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 percentages were fairly consistent over the last three years. Since the company was not operating at full production capacity we concluded that the company could continue 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 payable remained unchanged. 2. According to our calculations The Body Shop will need additional funding of ? 16. 97, ? 20. 55, and ? 24. 60 in 2002, 2003 & 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 able to conclude that The Body Shop will need the aforementioned funding. 3. Our first 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 financing needed.

Order custom essay Body Shop Case Analysis with free plagiarism report


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 manager 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 two 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 million for the upcoming fiscal year.

This essay was written by a fellow student. You can use it as an example when writing your own essay or use it as a source, but you need cite it.

Get professional help and free up your time for more important courses

Starting from 3 hours delivery 450+ experts on 30 subjects
get essay help 124  experts online

Did you know that we have over 70,000 essays on 3,000 topics in our database?

Cite this page

Explore how the human body functions as one unit in harmony in order to life

Body Shop Case Analysis. (2017, Mar 13). Retrieved from

Don't let plagiarism ruin your grade

Run a free check or have your essay done for you

We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

Save time and let our verified experts help you.

Hire writer