Lawrence Sports Working Capital Management
Lawrence Sports is a manufacturer of sporting goods facing a fiscal dilemma in the early spring of 2011. Between the months of March and April, the company would experience an impasse within the context of its Current Cash Conversion Cycle. Here, an improved strategy for working capital management is called for.
First, with respect to the cash conversion cycle, Lawrence Sports largely draws is working capital from two sources. The first of these is its partnership with Mayo, the largest retailer in the world and buyer of 95% of all goods from Lawrence. The second of these is the Central Bank, which maintains the company's account balance at $50,000 through a system of automatic loans that are invoked any time the company's cash availability slips beneath this margin. Historically, Lawrence has employed an Aggressive approach to its capital management by relying on...
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