Working capital strategies to prepare for long-term opportunities
Analyzing a company’s cash inflows and outflows accurately is challenging. Lawrence must determine how to deal with its primary customer’s inability to uphold the terms of payment. Stretching payables and borrowing from the $1.2 million line of credit with Central Bank is not proving to be an optimal solution since the interest rate on the line of credit increases as the borrowing amount increases. Chief Financial Officer Stephanie Sanders’ objective is to keep the amount of borrowing and accompanying interest rate burden as low as possible (University of Phoenix, 2008).
Cisco and McDonald’s have diversified operations and investments that attribute to their long-term working capital succession. In addition, Cisco’s automated collections system has subtracted days out of its operating and cash cycles. The company’s decision to move idle cash funds into income-generating accounts illustrates its efficient cash management practices.
McDonald’s is reinvesting its capital continuously to ensure long-term goals are reached. Lawrence needs to acquire better cash management and collection of accounts receivable to minimize borrowing from Central Bank at increased... [continues]
Cite This Essay
(2008, 04). Lawrence Sports Generic Benchmarking. StudyMode.com. Retrieved 04, 2008, from http://www.studymode.com/essays/Lawrence-Sports-Generic-Benchmarking-141299.html
"Lawrence Sports Generic Benchmarking" StudyMode.com. 04 2008. 04 2008 <http://www.studymode.com/essays/Lawrence-Sports-Generic-Benchmarking-141299.html>.
"Lawrence Sports Generic Benchmarking." StudyMode.com. 04, 2008. Accessed 04, 2008. http://www.studymode.com/essays/Lawrence-Sports-Generic-Benchmarking-141299.html.