Introduction
The Working Capital Management simulation (University of Phoenix, 2002) describes the firm Lawrence Sports; a $20 million revenue corporation, manufacturing and distributing sporting goods. In the simulation, the student is asked to take the part of the Financial Manager and charged with maintaining a monthly cash balance of $50,000, provide extra capital for growth and keep debt down.
Generic benchmarking allows the leader to identify best practices from within the same industry and outside the industry. Lawrence Sports clearly has some obstacles and opportunities that other corporations have experienced and have been able to turn to an advantage. Benchmarking can be accomplished through review of firms and also with examination of leaders (University of Phoenix, Unknown). Using the information related to each area of opportunity will allow Lawrence Sports the ability to use research to improve the prognosis of the cash management strategy. These topics include a) working capital strategies to prepare for long-term opportunities, b) purpose of cash budgeting, c) cash flow analysis, d) best practices in working capital management, e) risks and opportunities of working capital strategies and f) ethical implications of competing working capital alternatives.
Working Capital Strategies to Prepare for Long-term Opportunities
Per Brealey and Allen, “working capital strategies ensure companies have extra capital after meeting budget requirements in order to grow and invest in long-term opportunities.” “The regular use of commodity, currency and interest-rate options allow the financial manager to reduce risk.” (Brealey, Myers & Allen, 2005).
Lawrence Sports (LS) requires a sound strategi ...