Finance

Lawrence Sports Simulation

Team A

Dan Bagwell

Antonio Jones

Harrison Wall

FIN/571 Corporate Finance

Michael Kinnen, MBA

October 6, 2012

Lawrence Sports

Lawrence Sports is a $20 million revenue company that manufactures and distributes protective sports gear. Lawrence Sports currently faces the challenges associated from not having a viable and working capital management plan. Recent financial decisions have had a negative impact on the stability of the organization. These decisions have not only had an effect on the bottom line, but also on the relationships with customers and suppliers that have taken many years to establish.

Mayo, the world’s leading retailer, accounts for approximately 95% of total sales for Lawrence Sports. Gartner Products and Murray Leather Works source provide all supplies for Lawrence Sports. Lawrence Sports has reached an agreement with all three companies which allows flexible collection of funds however these arrangements have resulted negatively on Lawrence Sports’ cash flow.

Due to Lawrence Sports’ cash flow instability, they have partnered with suppliers and banks to purchase materials using a line of credit. Although, these credit lines enable Lawrence Sports to offset their cash flow to stay out of the red, the interest on these credit lines place a financial hardship on the company thus jeopardizing future success and growth. This paper will identify the situational analysis and cash conversion cycle for Lawrence Sports, by focusing on the financial concerns and opportunities.

Lawrence Sports is a thriving business; however, the company has problems with collecting receivables from its customers, which includes its number one customer and largest percent of their sales, Mayo. Having a cash budget will help Lawrence Sports keep an inventory of cash with dates the cash comes in and out. Without the use of a cash budget that produces positive cash flow, Lawrence Sports may...