Introduction
“The art of working capital requires good planning and quick responses” (University of Phoenix, 2009). In to-days aggressive business environment organizations must employ stringent working capital management techniques. This involves looking at all facets of the business and determining options to ensure the organization is managing cash as efficiently as possible. During the course of this paper the team reviewed several organizations that have employed cash management techniques that may benefit Lawrence Sports, a $20 million revenue company. Lawrence is faced with the challenge of maintaining good relationships with its business partners and catering to its own capital working capital needs. Lawrence’s primary customer is Mayo Stores and its two main suppliers are Gartner Products and Murray Leather Works.
Key Course Concepts
The team researched the following organizations, General Electric, JC Penny, Safeway Stores, Thoratec Corporation and Wal-Mart. “Implementing an effective working capital management system is an excellent way for organizations to improve their earnings” (Investopedia, 2009). The components of capital management reviewed for these organizations are, short term financing, inventory control, reducing risk of unexpected cash outflows, and business relations with suppliers. These organizations continue to improve their cash management techniques in an effort to keep the organization running efficiently while keeping investment in cash as low as possible.
“Companies frequently sell goods on credit, so that it may be weeks or even months before the company is paid” (Brealey, Myers, & Allen, 2005). Close collaboration between production, credit and cash managers is needed to avert financial stress as comp ...