Working capital management is the financial foundation vital to the success of businesses. In order to learn from this experience they will develop a working capital policy which will increase the predictability and efficiency of their cash.
The intent of a working capital management policy is to ensure an organization is able to continue business operations and has adequate ability to satisfy both short-term debt and upcoming operational expenses.
The outcomes of implementing such a solution are rather difficult to foresee, but one can only expect a worsening of the current problems.
The challenge is to consistently apply best practices; the solution is automated workflow driven by embedded policy which will ensure process integrity and standardized approaches in order to manage accounts receivables balances Protiviti, The second issue is Lawrence Sports is not effectively controlling the flow of cash.
Simply stated, "good management of working capital will generate cash, improve profits and reduce risks" Anonymous,para.
First Lawrence must determine the target cash balance to meet the daily needs of the business. Lawrence needs to look at working capital management as an opportunity to better serve its stakeholders and improve its current economic standing.
Foremost, the quality of the work performed by the employees would at least stagnate, but most likely decrease, resulting as such in unsatisfied and lost customers and culminating with decreasing levels of profitability. This in turn, will have a negative impact for the shareholders.
The loan that Lawrence has must be paid back in a short while. The suppliers would still receive their payments at regular dates and would therefore continue delivering high quality commodities in a timely and efficient manner.
Some types of short-term financing are: The company has hired recently a Finance Manager who will be responsible for managing the working capital needs of the company while maintaining good relationships with its three business partners Working Capital, Some companies pay late simply because they can.
The primary characteristics of this alternative are that it requires no additional time, efforts and financial resources, but it also has no benefits.
If the answer is yes, then is the positive trend increasing or decreasing? A b Supplier-vendor relationship Unlike changes in the priority of payments, the contracting of a bank loan would not affect the relationship between Lawrence Sports Inc. Companies use short-term financing to run its day-to-day operations which may include payment of wages to employees, inventory ordering and supplies.
The two companies that were benchmarked used line of credit, credit card, and short-term loans. Next lay these reports side by side this can yield insights into what is happening to the cash the customer is generating. Cash Flow Profit is always different from cash flows.
If the company is able to develop a policy that incorporates these three elements, it will be able to maximize the return on its cash. They should perform business practices in a manner which preserves relationships whenever possible. Working capital is defined as "the assets of a business that can be applied to the operations" or "the amount of current assets which exceed the current liabilities" Answers,para.
If something, the relationship would improve as more orders would be made and the company would have a better possibility of honouring its obligations to the suppliers.
This source is not sufficient to meet the cash flow needs of the business without resorting to stretching payables and borrowing against the Central Bank line of credit.
As a result the company can expect predictability in its cash flows and maximize the use of its cash for the shareholders. Ethically Lawrence has the responsibility to fulfill monetary obligations in a manner which meet the terms of sale.
Lastly, you must determine the quality of the cash flows. The context of the paper will examine the simulation of Lawrence Sports and provide an in-depth situation analysis starting with a brief background of the scenario, identify the issues and opportunities, explore stakeholder perspectives and ethical dilemmas.
A c Ability to resolve the problem now and in the future The immediate future could pose some threats as the company would also have to pay the bank loan. Lawrence Sports has a number of issues which need to be address; however, if they are able to make positive changes toward better working capital management, the company can enjoy growth and prosperity.
Working capital management involves managing inventories, accounts receivables and payable as well as cash.In this paper, the author has benchmarked six companies and compared issues relating to short-term financing options, commitment bank loans, cash conversion cycle and risk & opportunities to issues similarly faced by Lawrence Sports.
Lawrence Sports Essays: OverLawrence Sports Essays, Lawrence Sports Term Papers, Lawrence Sports Research Paper, Book Reports.
ESSAYS, term and research papers available for UNLIMITED access. Lawrence Sports, a company with $20 million in revenue, has to create a working capital policy that addresses their cash management needs for the long term. In the following paragraphs, cash balance requirements, credit policy, negotiating strategies, short-term financing, and monitoring metrics will be defined.
Lawrence Sports This Research Paper Lawrence Sports and other 64,+ term papers, college essay examples and free essays are available now on mint-body.com Autor: review • April 25, • Research Paper • 5, Words (21 Pages) • 3, Views.
Problem Solution: Lawrence Sports Inc. Lawrence’s Sports (LS) manufactures and distributes protective equipment for contact sports (UOP, ). LS operational income totals $20 million dollars annually and requires diligent management of working capital in order to meet customer expectations, and fulfill obligations to service shot-term.
Read Lawrence Sports free essay and over 88, other research documents. Lawrence Sports. Problem Solution: Lawrence Sports Inc.
Presently Lawrence Sports has had to make some short-term decisions concerning its working capital management.Download