Lawrence Sports (LS) is a $20 million revenue manufacturer and distributor of protective sports gear who sources material from two primary vendors, Gartner Products and Murray Leather Works (MLW). Gartner supplies LS with 70% of its raw materials. Mayo Stores is the world's leading retailer and accounts for 95% of LS's sales.
In recent weeks, Mayo has defaulted on 80% of its outstanding payments and LS suspects payment cannot be expected for two more weeks. LS are forced to negotiate payment deferrals to Gartner and MLW as the outstanding loan and interest burden have increased. This paper benchmarks short-term financing options for LS and explores alternative solutions from the perspective of the Financial Manager (FM), tasked with keeping the loan burden minimal, negotiating short-term payment and collection arrangements, and maintaining good relationships with vendors and customers.
Scenario One Problem Solution: Lawrence Sports
This paper will explore and discuss the working capital management of the hypothetical sports equipment manufacturer, Lawrence Sports (LS), introduced as a case study in the University of Phoenix MBA program. This paper will discuss how this author benchmarked solutions for LS' problem and end-state goals, analyzed the alternative solutions found through benchmarking and assessed the risks found with those solutions.
Lawrence Sports (LS) is a $20 million revenue manufacturer and distributor of protective sports gear. LS are receiving material from Gartner Products and Murray Leather Works (MLW). Gartner is a $200 million revenue producer of precision testing equipment, cured leather and fabric for sports accessories and provides LS with 70% of its raw materials. MLW is a $10 million revenue company and supplies LS with semi-finished leather products accounting for 75% of MLW's revenue. LS's primary customer is Mayo Stores and is the world's... [continues]
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