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Lawrence Sports Benchmarking
Problem/Opportunity Statement
Lawrence Sports is a $20 million revenue company that manufactures and distributes equipment and protective gear for baseball, football, baseball and volleyball. Lawrence Sports purchases raw materials from Gartner Products and Murray Leather Works. Mayo’s Stores, the world’s leading retailer is Lawrence’s primary customer. Lawrence faced a cash deficit situation, borrowed money from the bank that hit the maximum line of credit 1.2 million (Simulation, 2008). A financial manager needs to analyze how Lawrence’s financial decisions affect its working capital as account receivable, account payable, cash conversion cycle, understand ratios, maintain cash balances and develop short-term financial plans. Lawrence needs to achieve a tradeoff maintaining good relationships between the partners and good working capital management. The ultimate goal of a company is to create value among stakeholders and enhance a competitive advantage by using policies and strategies (Simulation, 2008).
Issues and Opportunities Identification
The main issue with Lawrence is Mayo may not be able to make their promised payment on an account until past due and it might take for another 2 or 3 weeks perceive that they are not certain when they will be able to make payment in full. On the other hand, Lawrence cannot pay the bills due to jeopardize money shortfalls meanwhile two suppliers depend on Lawrence. Recently, Lawrence does not have cash flow management strategy. The company must maintain cash flow by dealing with payment interruption, handling funding deficit, obtaining short-term financing. There are some issues ...