FIN/571 Corporate Finance
September 5, 2009
Lawrence Sports Simulation
A good working capital management plan is crucial for a firm as a result from a decision can affect cash flow. "Working capital decisions are fast paced because they reflect a firm's day-to-day operations" . (Emmery, Finnerty, & Stowe, 2007) . Lawrence Sports is a $20 million revenue company that is in the business of both manufacturing and distributing protective sports gear. Its biggest challenge to date is to combat the complexities of viable and working capital management plan. The company has made decisions that have impacted the company in both negative and positive ways depending on how well cash flows are.
Lawrence has three major business partners which , include Mayo, Gartner Murray. Of the three, Mayo is the largest and therefore is the principal customer for Lawrence as they contribute up to 95% of its sales. Lawrence has worked out an arrangement with each of the companies that allows for, flexible collection processes which often affect the firm’s cash flow.
Since the firm’s cash flow is often unstable, Lawrence has partnered with the companies to buy materials on either available cash-flow or credit. Lawrence Sports has these revolving credit lines as well as bank lines of credit to offset their cash-flow when it is in the red. This discussion will identify the situational analysis and cash conversion cycle for Lawrence Sports. By focusing on the issues and opportunities, Team B will evaluate alternatives working capital policies and present a recommendation with a clear solution to Lawrence Sports’ dilemma.
Lawrence Sports is a successful business; however [Place comma after "however"] the company has issues with collecting receivables from its customers including its number one customer and largest percent of sales Mayo. A cash budget will help Lawrence Sports keep an... [continues]
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