Need a case study anaylsis of NO MORE THAN 3 pages double-spaced (type-written) for Body Shop PLC 2001: An Introduction To Financial Modeling. The analysis should include the following: (1) identify the key problem(s) for which recommendations are needed, (2) identify the key factors or issues that require analysis in order to develop recommendations, (3) formulate recommendations that are consistent with the analysis.

The Body Shop Plc - Forecasted Financial Statements Assumptions Revenue Growth Cost of Sales Operating Expenses Interest Expense Tax Rate Ordinary dividend Cash Accounts Receivable Inventory Other current assets Net fixed assets Other assets Accounts Payable Taxes Payable Accruals Overdraft Other Current Liabilities Income Statement Sales Growth (%) Cost of sales % of Sales Gross profit Gross Margin (%) 2002 15% 2003 18% 40% 53% 39% 54% 6% 30% 10.90 14.50 8.0% 33.0% 4.7% 30% 0% 11% 3% 4% 0% 5% 6% 30% 10.90 14.50 8.0% 31.0% 4.7% 30% 0% 11% 3% 4% 0% 5% 2004 Remarks 20% Has been taken at 15% and then built extra 3% next year and peak rate of 20% for 2004 assuming initiatives will be taken for higher growth. This is because of rise seen in last two years 38% This has declined and been maintained at 40% and on a declining trend for going ahead 55% This is rising year over year and hence has been built with average hike of another 1% before it will peak at 55%. Exceptional and Restructuring cost is a one time cost and hence will have no future impact 6% 30% 10.90 14.50 8.0% 30.0% 4.7% 30% 0% 11% 3% 4% 0% 5% Interest expense has been assumed at 6%. For excess cash interest income of 6% has been built Maintained at last three years average rate Assumed to have a fixed cash balance of $14.5 milion every year end Maintained at last year average rate Maintained at last three years average rate but on a declining trend. Inventory is measured at cost of sales As per last two years Maintained at last three years average rate 2000 and 2001 represents receivables relating to sale of manufacturing plant which is assumed to have been recovered in 2002 Maintained at last three years average rate. Accounts Payable is measured at cost of sales Maintained at last three years average rate Maintained at last three years average rate Assumed not have any overdraft balance Maintained at last three years average rate 28-Feb-99 303.7 28-Feb-00 28-Feb-01 28-Feb-02 28-Feb-03 28-Feb-04 330.1 374.1 430.2 507.7 609.2 8.69% 13.33% 15.00% 18.00% 20.00% 127.7 130.9 149.0 172.1 198.0 231.5 42.05% 39.65% 39.83% 40.00% 39.00% 38.00% 176.0 199.2 225.1 258.1 309.7 377.7 57.95% 60.35% 60.17% 60.0% 61.0% 62.0% Balance Sheet Assets Excess Cash Cash % of sales Accounts receivable % of sales Inventories % of Cost of sales Other current assets % of sales Total Current Assets % of sales Net fixed assets % of sales Other assets*** % of sales Total assets % of sales 28-Feb-99 28-Feb-00 28-Feb-01 28-Feb-02 28-Feb-03 28-Feb-04 0.0 34.0 11.2% 27.8 9.2% 38.6 30.2% 12.5 4.1% 112.9 37.2% 87.8 28.9% 0.0 0.0% 200.7 66.1% 0.0 19.2 5.8% 30.3 9.2% 44.7 34.1% 15.6 4.7% 109.8 33.3% 104.7 31.7% 6.0 1.8% 220.5 66.8% 0.0 13.7 3.7% 30.3 8.1% 51.3 34.4% 17.5 4.7% 112.8 30.2% 110.6 29.6% 6.7 1.8% 230.1 61.5% 0.0 15 3.4% 34.4 8.0% 56.8 33.0% 20.2 4.7% 125.9 29.3% 129.1 30.0% 0.0 0.0% 255.0 59.3% 0.0 14.5 2.9% 40.6 8.0% 61.4 31.0% 23.9 4.7% 140.3 27.6% 152.3 30.0% 0.0 0.0% 292.6 57.6% 0.0 14.5 2.4% 48.7 8.0% 69.4 30.0% 28.6 4.7% 161.3 26.5% 182.8 30.0% 0.0 0.0% 344.1 56.5% Liabilities and Equity Accounts payable % of Cost of Sales Profit/(loss) after tax (4.6) 18.4 9.3 18.7 21.9 26.0 Taxes payable Net Margin (%) -1.51% 5.57% 2.49% 4.35% 4.32% 4.27% % of sales Ordinary dividends 10.9 10.9 10.9 10.9 10.9 10.9 Accruals Profit/(loss) retained (15.5) 7.5 (1.6) 7.8 11.0 15.1 % of sales Overdrafts % of sales Other current liabilities * Exceptional costs in 2001 included redundancy costs (4.6 million), costs of supply chain development (2.4 million) and impairment of fixed assets and goodwill (4.2 million). The exceptional costs of 4.5 million in 1999 were associated with closing % of sales unprofitable shops and an impairment review of the remaining shops in the USA. Total Current Liabilities % of sales ** Restructuring costs in 2001 and 2000 relate to the sale of manufacturing plants in Littlehampton, England, and to associated reorganization costs. Restructuring costs in 1999 arose from the realignment of the management structure of the business in the US Long-term liabilities % of sales and the UK. Other liabilities**** *** Other assets in 2001 and 2000 represented receivables relating to the sale of the company's Littlehampton manufacturing plant. % of sales Shareholders' equity **** Other liabilities included mostly deferred taxes. % of sales Total liabs. and equity % of sales 13.0 10.2% 11.3 3.7% 10.8 3.6% 0.0 0.0% 21.6 7.1% 56.7 18.7% 28.0 9.2% 1.7 0.6% 114.3 37.6% 200.7 66.1% 20.5 15.7% 11.7 3.5% 15.6 4.7% 0.3 0.1% 13.3 4.0% 61.4 18.6% 36.7 11.1% 1.0 0.3% 121.4 36.8% 220.5 66.8% 10.7 7.2% 7.1 1.9% 11.5 3.1% 0.7 0.2% 16.9 4.5% 46.9 12.5% 61.2 16.4% 0.4 0.1% 121.6 32.5% 230.1 61.5% 18.9 11.0% 12.9 3.0% 16.3 3.8% 0.0 0.0% 21.5 5.0% 69.7 16.2% 55.9 13.0% 0.0 0.0% 129.4 30.1% 255.0 59.3% 21.8 11.0% 15.2 3.0% 19.3 3.8% 0.0 0.0% 25.4 5.0% 81.7 16.1% 70.5 13.9% 0.0 0.0% 140.4 27.7% 292.6 57.6% 25.5 11.0% 18.3 3.0% 23.1 3.8% 0.0 0.0% 30.5 5.0% 97.3 16.0% 91.2 15.0% 0.0 0.0% 155.6 25.5% 344.1 56.5% Trial Assets Trial Liabs and Equity Plug: Debt (Excess Cash) 200.7 172.7 - 220.5 183.8 - 230.1 168.9 - 255.0 199.1 - 292.6 222.1 - 344.1 252.9 - Operating expenses Regular Expenses % of Sales Exceptional costs* % of Sales Restructuring costs** % of Sales EBIT Net interest expense % of Sales Profit before tax Tax expense % of PBT 151.4 49.85% 4.5 1.48% 16.6 5.47% 166.2 50.35% 0.0 0.00% 2.7 0.82% 195.7 52.31% 11.2 2.99% 1.0 0.27% 228.0 53.00% 274.1 54.00% 335.1 55.00% 3.5 0.1 0.03% 3.4 8.0 235% 30.3 1.5 0.45% 28.8 10.4 36% 17.2 4.4 1.18% 12.8 3.5 27% 30.1 3.4 0.78% 26.8 8.0 30% 35.5 4.2 0.83% 31.3 9.4 30% 42.6 5.5 0.90% 37.2 11.2 30%