Fin571 Week 3 Lawrence Sports Simulation Paper

Lawrence Sports Simulation Paper

The Lawrence Sports Simulation gives you real examples of how to balance the day to day cash flow of the company. Lawrence Sports (LS) is a leading manufacturer and distributor of sporting equipment with $20 million in revenue to manage. They currently have three business partners: Mayo Stores, Gartner Products, and Murray Leather Works. This paper will analyze three alternative working capital policies Team D has created that will reduce future difficulties for the company. Identification of the top recommendation with an evaluation of the risk involved, contingencies, performance measures, and implementation plan is determined. A review of the cash conversion cycle for Lawrence Sports Simulation is completed for its importance to their working capital management; additionally working capital management policies and efficient cash management techniques for improved performance.

Keown (2005) mentions that a working capital is the residue of cash after the liability of the firm are paid off. In other terms it is the difference between the current assets of the company and the current liabilities. This encompasses the management of current asset and liabilities of the firm. Capital management shares the overall financial management goal, which is maximizing the share holder’s value. Current assets and current liabilities of the company are those assets and liabilities, which have short term maturity of less than one year. Companies end up being unsuccessful because they cannot pay off their short-term loans and keep the working capital management that they have established in order. The core function of working capital management is finding the optimal combination of the inflow of capital and the out flow of capital while achieving the financial goal of the firm.

Lawrence Sports is trying to overcome challenges with a capital management problem and is attempting to address the situation before it becomes uncontrollable....