Lawrence Sports Working Capital Policy Paper

Lawrence Sports is in a quandary with the on the job(p) roof policy. Currently, the mickle is relying on one major customer (Mayo Stores) and their accounting procedures to wangle Lawrence Sports working capital. This is resulting in a gold flow crisis in times where Mayo has not honored the existing call of payment. In order to maximize shareholder wealth, Lawrence Sports mustiness give gold balance requirements that exit meet existing obligations and pay future opportunities. This can be accomplished by recognizing cash balance requirements, reviewing existing credit policies, negotiating supplier terms and conditions, having a short-term finance strategy, and monitoring the performance to ensure the reliable methods are working. Additionally, when deciding on a working capital policy, Lawrence Sports must consider the stakeholders and understand any ethical dilemmas at bottom the solution.

Cash Balance Requirements Having enough cash on overstep to cover payables is important to any business. However, having too much cash on hand that is not earning interest does not nutriment the financial best interest of a company. Finance must determine the cash balance required to cover the accounts payables and love cash reserves necessitate for long-term opportunities. ?The cash compute tells the manager what borrowing is required or what lending will be possible in the short run,? (Ross, Westerfield, & Jaffe, 2004, p. 746).



Lawrence Sports before long does not have an appropriate cash bud stir to hook up with these guidelines. Reviewing the cash flow plan there are numerous weeks that the closing cash balance was under the amount needed to compensate for the total outflows. This provides the opportunity for Lawrence Sports to develop a working capital policy and a cash budget to hone their working capital.

First, as indicated above, Lawrence Sports has several weeks that reflect a discredit inflow of cash than the outflow of cash. To determine an...

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