Sports

Lawrence Sports manufactures and distributes sporting and protective gear for baseball, football, basketball, and volleyball, which has yield the company $20 million in revenue, with a line of credit of 1.2 miilion. Lawrence Sports purchases materials from Gartner Products and Murray Leather Works, which whom they distribute 95% of the items produced by Mayo Stores, which is not only a world-leading retailer, but the company is also Lawrence Sports’ major customer. As a result, Lawrence Sports had to establish a credit policy to represent the relationships with its vendors. Lawrence Sports hired a financial manager to help with the current capital management challenges that they are faced with. Lawrence Sports company needs to develop a working capital policy which covers cash balance requirements, credit policy, supplier negotiation strategy, short-term financing, and measurable metrics to monitor performance against the policy. .

Lawrence Sports continued to experience highs and lows in terms of cash flow. Whenever the cash flow decreased, the company had to renegotiate with its vendors to delay accounts payable in order to generate enough cash to maintain daily operations. As a result, Lawrence Sports working relationship with its vendors began to suffer. The company realized that a plan needed to be implemented as an attempt to savage business relationships as well as the company itself. Lawrence Sports sought out assistance from a professional consulting firm to aid in revising the company’s current working capital policy and implementing a cash budget to optimize working capital. (Stimulation: Working Capital Management)

The purpose of this paper is for Lawrence Sports to look at their weaknesses as it relates to their existing working capital policy which has lead to their cash flow problems, and create a competitive advantage to enhance the working capital and increase their cash flow....