Model Facts

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Copyright © 2001 by the Trustees of the University of Virginia Darden School Foundation.Revised, March 7, 2006.

Model Facts

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Please note:

Copyright © 2001 by the Trustees of the University of Virginia Darden School Foundation.Revised, March 7, 2006.

This spreadsheet supports student analysis of the case, "The Body Shop International Plc 2001" (UVA-F-1349)

1) This is a working model. Assumptions / Inputs presented can be changed to vary the results.

2) This spreadsheet incorporates circular logical reference. To resolve this circularity, please instruct Excel to "iterate" several times in calculating the results. This is accomplished by clicking on Tools/Options/Calculation, and then checking the iteration box.

3) As long as default spreadsheet calculation is set as "automatic" impact of changing assumptions will be computed in real time. Alternatively the F9 function key may need to be invoked to recalculate results. To set the numerical calculation settings to automatic, please click on Tools/Options/Calculations menu, and check the automatic calculation option.

Input Data Exhibit 1The Body Shop Plc 2001: Format for Developing a Spreadsheet Model

SALES 422,733

COGS/SALES 0.38 OPERATING EXPENSES/SALES 0.50 Excess cash debtINTEREST RATE 0.06 19520 0TAX RATE 0.30 0.35 19520 0DIVIDENDS (Thousand pounds) 10,900 0.38 19520 0CURR. ASSETS/SALES 0.32 0.4 19520 0CURR. LIABS./SALES 0.28 0.42 19520 0FIXED ASSETS 110,600 0.44 19520 0STARTING EQUITY 121,600 0.45 19520 0

INCOME STATEMENT 2002

SALES 422733COGS 190230OPERATING EXPENSES 211367INTEREST EXPENSE (INCOME) -1171PROFIT BEFORE TAX 51899TAX 15570PROFIT AFTER TAX 36329DIVIDENDS 10900EARNINGS RETAINED 25429

BALANCE SHEET 2002

Excess ash 19520CURRENT ASSETS 135275FIXED ASSETS 110600TOTAL ASSETS 265395

CURRENT LIABILITIES 118365DEBT 0EQUITY 147029TOTAL LIAB. & NET WORTH 265395

Trial assets 245875Trail liabilities 265395Plug -19520

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Exhibit 2The Body Shop Plc 2001:Spreadsheet Formulas to Forecast 2002 Financials:

Input Data

SALES 422,733 COGS/SALES 0.38 OPERATING EXPENSES/SALES 0.50 INTEREST RATE 0.06 TAX RATE 0.30 DIVIDENDS (Thousand pounds) 10,900 CURR. ASSETS/SALES 0.32 CURR. LIABS./SALES 0.28 FIXED ASSETS 110,600 STARTING EQUITY 121,600

INCOME STATEMENT 2002

SALES +B3COGS +B4*B16OPERATING EXPENSES +B5*B16INTEREST EXPENSE (INCOME) +B6*B33PROFIT BEFORE TAX +B16-B17-B18-B19TAX +B7*B20PROFIT AFTER TAX +B20-B21DIVIDENDS +B8EARNINGS RETAINED +B22-B23

BALANCE SHEET 2002

CURRENT ASSETS +B9*B16FIXED ASSETS +B11TOTAL ASSETS +B28+B29

CURRENT LIABILITIES +B10*B16DEBT +B30-B32-B34EQUITY +B12+B24TOTAL LIAB. & NET WORTH +B32+B33+B34

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Exhibit 3The Body Shop Plc 2001:Basic Forecasting Results for 2002

Input Data

SALES 422,733 COGS/SALES 0.38 OPERATING EXPENSES/SALES 0.50 INTEREST RATE 0.06 TAX RATE 0.30 DIVIDENDS (Thousand pounds) 10,900 CURR. ASSETS/SALES 0.32 CURR. LIABS./SALES 0.28 FIXED ASSETS 110,600 STARTING EQUITY 121,600

INCOME STATEMENT 2002

SALES 422,733 COGS 160,639 OPERATING EXPENSES 211,367 INTEREST EXPENSE (INCOME) (1,171)PROFIT BEFORE TAX 51,899 TAX 15,570 PROFIT AFTER TAX 36,329 DIVIDENDS 10,900 EARNINGS RETAINED 25,429

BALANCE SHEET 2002

CURRENT ASSETS 135,275 FIXED ASSETS 110,600 TOTAL ASSETS 245,875

CURRENT LIABILITIES 118,365 DEBT (19,520)EQUITY 147,029 TOTAL LIAB. & NET WORTH 245,875

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Exhibit 4The Body Shop Plc 2001:Adjusting to Reflect Excess Cash

Input Data

SALES 422,733 COGS/SALES 0.38 OPERATING EXPENSES/SALES 0.50 INTEREST RATE 0.06 TAX RATE 0.30 DIVIDENDS (Thousand pounds) 10,900 CURR. ASSETS/SALES 0.32 CURR. LIABS./SALES 0.28 FIXED ASSETS 110,600 STARTING EQUITY 121,600

INCOME STATEMENT 2002

SALES 422,733 COGS 160,639 OPERATING EXPENSES 211,367 INTEREST EXPENSE (INCOME) +(B6*B34)-(B6*B28) PROFIT BEFORE TAX 40,706 TAX 14,247 PROFIT AFTER TAX 26,459 DIVIDENDS 10,900 EARNINGS RETAINED 15,559

BALANCE SHEET 2002

EXCESS CASH =IF(B40<0,-B40,0) CURRENT ASSETS 135,275 FIXED ASSETS 110,600 TOTAL ASSETS +B29+B30+B28

CURRENT LIABILITIES 118,365 DEBT =IF(B40>0,+B40,0) EQUITY 137,159 TOTAL LIAB. & NET WORTH +B33+B34+B35

TRIAL ASSETS +B29+B30 TRIAL LIABILITIES AND EQUITY +B33+B35 PLUG: DEBT (EXCESS CASH) +B38-B39

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Exhibit 5The Body Shop Plc 2001:Finished Results for 2002, Reflecting Excess Cash

Input Data

SALES 422,733 COGS/SALES 0.38 OPERATING EXPENSES/SALES 0.50 INTEREST RATE 0.06 TAX RATE 0.30 DIVIDENDS (Thousand pounds) 10,900 CURR. ASSETS/SALES 0.32 CURR. LIABS./SALES 0.28 FIXED ASSETS 110,600 STARTING EQUITY 121,600

INCOME STATEMENT 2002

SALES 422,733 COGS 160,639 OPERATING EXPENSES 211,367 INTEREST EXPENSE (INCOME) (1,171)PROFIT BEFORE TAX 51,899 TAX 15,570 PROFIT AFTER TAX 36,329 DIVIDENDS 10,900 EARNINGS RETAINED 25,429

BALANCE SHEET 2002

EXCESS CASH 19,520 CURRENT ASSETS 135,275 FIXED ASSETS 110,600 TOTAL ASSETS 265,395

CURRENT LIABILITIES 118,365 DEBT 0 EQUITY 147,029 TOTAL LIAB. & NET WORTH 265,395

TRIAL ASSETS 245,875 TRIAL LIABILITIES AND EQUITY 265,395 PLUG: DEBT (EXCESS CASH) (19,520)

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Exhibit 6The Body Shop Plc 2001:Set up for a Forecast with Data Table

Input Data

SALES 422,733 COGS/SALES 0.38 OPERATING EXPENSES/SALES 0.50 Sensitivity AnalysisINTEREST RATE 0.06 Of Debt and Excess CashTAX RATE 0.30 To COGS/SALES RatioDIVIDENDS (Thousand pounds) 10,900 CURR. ASSETS/SALES 0.32 COGS/SALES DEBT Ex. CASHCURR. LIABS./SALES 0.28 =B34 =B28FIXED ASSETS 110,600 0.35 STARTING EQUITY 121,600 0.38

0.40 INCOME STATEMENT 2002 0.42

0.44 SALES 422,733 0.45 COGS 160,639 0.48 OPERATING EXPENSES 211,367 INTEREST EXPENSE (INCOME) (1,171)PROFIT BEFORE TAX 51,899 TAX 15,570 PROFIT AFTER TAX 36,329 DIVIDENDS 10,900 EARNINGS RETAINED 25,429

BALANCE SHEET 2002

EXCESS CASH 19,520 CURRENT ASSETS 135,275 FIXED ASSETS 110,600 TOTAL ASSETS 265,395

CURRENT LIABILITIES 118,365 DEBT - EQUITY 147,029 TOTAL LIAB. & NET WORTH 265,395

TRIAL ASSETS 245,875 TRIAL LIABILITIES AND EQUITY 265,395 PLUG: DEBT (EXCESS CASH) (19,520)

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Exhibit 7The Body Shop Plc 2001:Finished Forecast with Data Table

Input Data

SALES 422,733 COGS/SALES 0.38 OPERATING EXPENSES/SALES 0.50 Sensitivity AnalysisINTEREST RATE 0.06 Debt and Excess CashTAX RATE 0.30 By COGS/SALESDIVIDENDS (Thousand pounds) 10,900.00 CURR. ASSETS/SALES 0.32 COGS/SALES DEBT Ex. CASHCURR. LIABS./SALES 0.28 +B34 +B28FIXED ASSETS 110,600 0.35 0 28,787 STARTING EQUITY 121,600 0.38 0 19,520

0.40 0 13,342 INCOME STATEMENT 2002 0.42 0 7,165

0.44 0 987 SALES 422,733 0.45 2,102 0 COGS 160,639 0.48 11,369 0 OPERATING EXPENSES 211,367 INTEREST EXPENSE (INCOME) (1,171)PROFIT BEFORE TAX 51,899 TAX 15,570 PROFIT AFTER TAX 36,329 DIVIDENDS 10,900 EARNINGS RETAINED 25,429

BALANCE SHEET 2002

EXCESS CASH 19,520 CURRENT ASSETS 135,275 FIXED ASSETS 110,600 TOTAL ASSETS 265,395

CURRENT LIABILITIES 118,365 DEBT 0 EQUITY 147,029 TOTAL LIAB. & NET WORTH 265,395

TRIAL ASSETS 245,875 TRIAL LIABILITIES AND EQUITY 265,395 PLUG: DEBT (EXCESS CASH) (19,520)

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Fiscal Year Ended February 28

1999 1999 2000 2000 2001 2001

(GBP) (% sales) (GBP) (% sales) (GBP) (% sales)

Income Statement

Turnover 303.7 100.0 330.1 100.0 374.1 100.0

Cost of sales 127.7 42.0 130.9 39.7 149.0 39.8

Gross profit 176.0 58.0 199.2 60.3 225.1 60.2

Operating expenses:

–excluding exceptional costs 151.4 49.9 166.2 50.3 195.7 52.3

4.5 1.5 0.0 0.0 11.2 3.0

16.6 5.5 2.7 0.8 1.0 0.3

Net interest expense 0.1 0.0 1.5 0.5 4.4 1.2

Profit before tax 3.4 1.1 28.8 8.7 12.8 3.4

Tax expense 8.0 2.6 10.4 3.2 3.5 0.9

Profit (loss) after tax (4.6) (1.5) 18.4 5.6 9.3 2.5

Ordinary dividends 10.9 3.6 10.9 3.3 10.9 2.9

Profit (loss) retained (15.5) (5.1) 7.5 2.3 (1.6) (0.4)

Fiscal Year Ended February 28

1999 1999 2000 2000 2001 2001

Balance Sheet (GBP) (% sales) (GBP) (% sales) (GBP) (% sales)

Assets

Cash 34.0 11.2 19.2 5.8 13.7 3.7

Accounts receivable 27.8 9.2 30.3 9.2 30.3 8.1

Inventories 38.6 12.7 44.7 13.5 51.3 13.7

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Other current assets 12.5 4.1 15.6 4.7 17.5 4.7

Net fixed assets 87.8 28.9 104.7 31.7 110.6 29.6

0.0 0.0 6.0 1.8 6.7 1.8

Total assets 200.7 66.1 220.5 66.8 230.1 61.5

Liabilities and equity

Accounts payable 13.0 4.3 20.5 6.2 10.7 2.9

Taxes payable 11.3 3.7 11.7 3.5 7.1 1.9

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Accruals 10.8 3.6 15.6 4.7 11.5 3.1

Overdrafts 0.0 0.0 0.3 0.1 0.7 0.2

Other current liabilities 21.6 7.1 13.3 4.0 16.9 4.5

Long-term liabilities 28.0 9.2 36.7 11.1 61.2 16.4

debt

1.7 0.6 1.0 0.3 0.4 0.1

Shareholders' equity 114.3 37.6 121.4 36.8 121.6 32.5

Total liabilities and equity 200.7 66.1 220.5 66.8 230.1 61.5

–exceptional costs1

Restructuring costs2

Other assets3

Other liabilities4

1 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 unprofitable shops and an impairment review of the remaining shops in the USA.

2 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 and the UK.

3 Other assets in 2001 and 2000 represented receivables relating to the sale of the company's Littlehampton manufacturing plant.

4 Other liabilities included mostly deferred taxes.

Forecasting result for 2002