Lawrence Sports Working Capital Policy
Lawrence Sports is a company that manufacturers and distributes. Lawrence Sports makes and distributes protective gear and equipment for football, baseball, volleyball, and basketball. Lawrence purchases material from Murray Leather Works and Gartner Products. Lawrence Sports distributes 95% of their manufactured products to stores such as Mayo Stores. Lawrence Sports receives about $20 million in revenues (University of Phoenix, 2008).
Lawrence Sports, as with any business, will need to keep a watch over of cash inflow and outflow and maintain any money that is being deposited in. Lawrence Sports will need to use correctly cash budgeting and identify any weaknesses with working capital policies which will lead to the disturbance of cash flow problems. Lawrence Sports will need to balance capital management and maintain a constant in cash flow operation, in order to survive and be successful. If Lawrence Sports does not receive any cash inflow, then a risk of possible bankruptcy will be imminent. Lawrence Sports is lacking strategic capital working policies and has a vast selection of customers and suppliers. Lawrence Sports will need to have the following capital strategies in order to be successful:
1. Cash balance requirements including cash reserves needed for long-term opportunities that may arise.
2. Credit policy that balances Lawrence Sports desire to minimize accounts receivable and maximize revenue.
3. Supplier negotiation strategy for terms of payment that balances the costs to Lawrence Sports and their cash requirements.
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