Lawrence Sports generates $20 million dollar revenue organization that manufacture and distributes a variety of sport equipment. The team C consultants were tasked with simulating the business processes and making three alternatives recommendations for working capital policies to improve the business operations and cash flow. Team C consultants’ observations will include an evaluation on the risks associated with each of the recommendations, contingencies for the recommendation, and performances measures. Taking chances and not evaluating the company condition can reduce Lawrence Sports' profits. Team C consultants’ will put together an implementation plan for Lawrence Sports to increase cash flow, capital management and cash conversion cycle.
The Lawrence Sports Simulation is focused on working capital management and how best to resolve cash flow with short term or long term borrowing. Working capital management is how management uses current (short-term) assets and liabilities (Emery, 2007). Lawrence Sports are to manage cash flow while maintaining a positive vendor relationship. The vendors are important to the company; they sell the supplies used for manufacturing products and also market the end product for sale. Team C consultants need to create three alternative working capital policies. Lawrence Sports is in a position to incorporate these alternative working capital and they will permit the organization to grow to be a successful organization.
One alternative working capital policy recommendation is time-value-of-money. The time-value-of-money is an important financial concept. When organizations establish proposals for working capital policies, they realize improvement can do extremely well and enhance working capital (Time Value of Money, 2010). “Working capital involves using appropriate investments in cash, marketable securities, receivables, and inventories” (Emery, 2007). According to Newton, The time value of money is a basic...