Our findings are relevant because they show a simple way of evaluating the finances and the possible outcomes on the finances by changing a few variables. Why are they relevant to Roddick? The fact that profits are going to steadily increase over the next 3 forecasted years. They are forecasted to grow at around 11%. In the past the media has judged The Body Shop by its large profits and not its social action. If the media sees the company as having an average profit margin relative to the industry the media might focus on the social actions the company likes to pursue. This in itself should grab the attention of Roddick. She is going to have excess cash each year that she can use toward the goodwill projects she likes so much.
The implications of the findings are that the company should not take on any new debt. It should focus on keeping the COGS and expenses low. By keeping the COGS at 38% of sales for the next 3 years, the company can stay out of debt and have excess cash.
Management must focus on improving operating efficiency to keep operating expenses low. If management keeps operating expenses at or less than 55% of sales they will have excess cash. They should also focus on keeping inventory low and the turnover high. The company has a possible need for external financing, but if the COGS and expenses are managed properly, management can steer clear of debt. Management needs to keep cost cutting initiatives as the main focus because this way they can expect excess cash for the 3 projected years. Also, the company should focus on keeping the net fixed assets the same because they can support the additional growth in sales.