Premium Essay

Lawrence Sports Simulation

In: Business and Management

Submitted By lepoway
Words 1463
Pages 6
Lawrence Sports Simulation
Working capital management and the capital conversion cycle are keys to success in companies. According to Emery, Finnerty & Stowe (2007), this term is defined as “the management of working capital management of assets and liabilities.” Having an excellent working capital management policy can help the company to be more effective in improving profits and reducing risk most commonly associated with capital investment. Lawrence Sports is a manufacturer and distributor of sports equipment. Following will include an analysis of the issues this corporation is currently facing. A list of recommendations to the company along with an analysis of the cash conversion cycle, the working capital management policies and cash management techniques to reduce the risk associated with capital investment, trade of products in other countries and currency exchange impact will be evaluated.
Dependency Reduction Recommendation The Lawrence Sport simulation does emphasize the importance of all the business partners to the cash conversation cycle of the organization. For that reason, keeping a strong business bond between all partners is very much in need. Lawrence Sports has been having issues with cash flow because of late payments from vendors and sometimes a result of no payments. Lawrence Sports should work on improving its cash flow by establishing a system of regularity which can be done by adding competition on both sides of the transaction- the sales as well as the purchases. This will stop its dependency on one vendor. Mayo Stores stands as the only main sales vendor for Lawrence with 95 % of Lawrence production with payment terms of 20% on sales and 80% on the following weeks, which makes Mayo standing as Lawrence’s main cash flow. Lawrence Sports needs to open its production to different stores and retailers so its cash flow would not be...

Similar Documents

Free Essay

Lawrence Sports Simulation

...Lawrence Sports Simulation FIN/571 Corporate Finance Prof. Ricardo Rivera Matos May 29, 2012 University of Phoenix * Lawrence Sports Simulation * The process of taking risks will define if a company will emerge from a financial situation. The business relationships will suffer, but if the high risk is in a short term basis, probably this will help both parts to comprehend why is important to keep good finance health when an emergency situation occurs. * Lawrence Sports is a 20 million revenue company that manufactures and distributes equipment and preventive gear for baseball, football, basketball, and volleyball. Mayo Stores is the principal customer of Lawrence Sport. Mayo also is the world leading retailer, with 3,000 stores with operations in United States, Canada, South America, and Europe. Lawrence sources all its materials from Gartner Products and Murray Leather Works. * Robert Dent is the Key Account Manager of Mayo Stores. He has shown an impressive track record in building and excellent and profitable relationship with Mayo. Ann-Wu Head is the head of vendor relationship. She feels that Lawrence Sports’ bargaining power with Gartner is restricted since Lawrence Sports is not a major customer for Gartner. She finds Murray the more flexible of the two vendors and she is looking for more vendors like them. She feels that Murray is likely to run deep financial troubles if Lawrence Sports stretches payment beyond a limit. * As managers we...

Words: 2015 - Pages: 9

Premium Essay

Lawrence Sports Simulation

...Introduction Guillermo Furniture Store is a furniture manufacturer in Sonora, Mexico who faces competition who are putting a dent in his business with more modern equipment lowering production costs hurting his profit margins and lowering prices. The principles of finance describe typical behavior in financial transactions and provide guidance for decision making. Financial Self Interest guides rational decision making Guillermo has to make decisions based on the fact money is not everything. There is a balance of work and life. He has chosen not to acquire any companies since it would take time away from his family. Many financial decisions must consider the time value of money The furniture store has to consider that a dollar today is worth more than a dollar tomorrow. The time value of money derives from the opportunity to earn interest on it. Simply stated, the time value of money is how much it costs to “rent” money. Emery Finnerty Stowe All Transactions have at least two sides, with each party considering their self interest Most transactions are Zero-Sum where one party gains only at the other party’s expense. In this case Guillermo must negotiate the terms and conditions that are favorable to the growth of his furniture business if he goes into partnerships with competitors or foreign distributors. Incremental costs and benefits are the basis for choices among alternatives. Guillermo must weigh the cons and pros of staying current, going high tech or......

Words: 529 - Pages: 3

Premium Essay

Managing Liquidity

...Lawrence Sports Simulation: Managing Liquidity Lawrence Sports Simulation: Managing Liquidity This paper will discuss the three alternative working capital policies that manage working capital. Team D will identify the policy in which the team believes that Lawrence uses and will then make a recommendation on what policy Lawrence Sports should continue to use. This paper will then go on to include an evaluation of the risks that are associated with each of the policies as well as discuss the contingencies for the policy in which is recommended. This paper will also discuss the performance measures that could be used to evaluate the team’s recommendation. Finally, this paper will discuss an implementation plan for the team’s recommendation. Alternate Capital Policies Current Policy (Conservative Approach) The current policy in place at Lawrence is one that can be considered a conservative approach. The Conservative Approach uses long-term financing for the company’s long term assets, a few of the company’s temporary current assets, and all of the company’s permanent current assets (Emery et al., 2008). This has resulted in high costs of financing for Lawrence Sports with little risk; causing the company’s profitability to be low. Simply put; Lawrence has predominantly financed all of its current assets using long-term sources of financing where only a small portion of its assets sing short-term financing. This presents the risk of Lawrence developing a liquidity......

Words: 1680 - Pages: 7

Free Essay

Lawrence Simulation Paper Fin 571

...Lawrence Sports Simulation Lawrence Sports experienced difficult times in March and April when their biggest consumer could not pay for its products. Because of this, the cash conversion cycle was examined as well as the working capital management presently used. Additional views were studied to determine the best course of action for the company. Although multiple factors play a role in determining the best working capital management policy, Team D will offer recommendations and how each philosophy would be beneficial for Lawrence Sports. Cash Conversion Cycle Emery, Finnerty, and Stowe (2007) summarized that “the cash conversion cycle is the length of time between when a firm pays its accounts payable and when it collects on its accounts receivable and is equal to the inventory conversion period plus the receivables collection period minus the payables deferral period” (p. 659). The initial start for the cash implementation plan would be to create and demonstrate a vendor program, such as a payable deferral period program and create longer cash conversion cycles for floating payment programs for payments going to the banks. Next pre-arrange the short term borrowing program by using short term marketable securities. The Lawrence Sports Company financial departments need to begin following strict money formulas before any transactions pertaining to the market are made. Then it would be smart to hold cash balances for pertinent needs. This will allow and open doors......

Words: 1681 - Pages: 7

Free Essay

Guillermo Furniture Store Analysis

...Lawrence Sports Simulation University of Phoenix FIN/571 Professor Helen Horton-Brown June 25, 2012 Lawrence Sports Simulation Lawrence Sports is both a distributor and manufacturer of sports equipment and protective gear. Because of the company’s size and industry, it is critical for Lawrence Sports (LS) to integrate an effective cash budget to become less reliant on short-term financing. Cash budgeting is an integral component for effective capital working policy (Emery, Finnerty, & Stowe, 2007). Establishing a cash budget is a means to observe a company’s inflow and outflow of cash, which in turn, will assist in adequate forecasting and planning, especially concerning when it comes to short-term credit (Emery et al, 2007). A high-quality working capital policy would also free up cash, which may be allocated to strategic areas for the company’s growth. LS must cease from financing shortages through credit lines with heavy reliance on selling inventory and receiving prompt payments. To understand the changes needed, a review of LS current policy will be analyzed and alternative working capital policies will be compared. Recommendations will be represented regarding which policy LS should implement. Alternative working capital policies The first alternative working capital policy is for LS to negotiate better collection on sales terms with Mayo Stores. The initial arrangement is to receive 20%......

Words: 1763 - Pages: 8

Premium Essay

Lawrence Team

...Lawrence Sports Working capital management is very important in running a business because it involves managing all current assets and liabilities. Working capital management involves making appropriate investments in cash, marketable securities, receivables, and inventories, as well as the level and mix of short-term financing (Emery, Finnerty, Stowe, 2007, p. 639, para. 3). Currently Lawrence sports, a multi-million dollar company that manufactures and distributes sports equipment is seeking a way to better manage its’ capital, lower loan burdens, and undertake better business deals with its’ three business partners. Management can solve this issue with working capital policies that reduce future difficulties. Alternative Working Capital Policies As the newly appointed finance manager, one must be fully aware of the companies operating expenses, principal source of finance, suppliers and current financial stance and process with the lending bank. Understanding how all of these relationships can cohesively work together is key to being a success in this new role. By being properly prepared and developing successful working capital policy, the company will always have balanced receivables and payables due to working and negotiating with Lawrence Sport’s customers and suppliers. This type of communication and action plan will result in optimizing revenue, decreasing cash borrowed turn-around time, positive business relations and maintaining positive cash balance thus...

Words: 1870 - Pages: 8

Premium Essay

Risks Associated to the Different Alternatives

...levels at the desired point while guaranteeing the inflows from the opened receivables. Collecting these accounts on time will allow Lawrence avoiding the dependency on the bank loans to keep up with short-time expenses. Through the implementation of a payment discount system, Lawrence can speed up collections. Offering a 3/10 net 30 payment discount, which means that the company offers a 3 percent discount within 10 days, with the remainder due in 30 days, will provide an incentive for early payment and increase cash inflow. Risk Associated with policy Utilizing payment discounts will provide an incentive for early payment; however the risk for Lawrence is that Mayo and other partners will not take advantage of the payment discount. Mayo and Lawrence’s other partners may want to have a high deferral period which can enhance a company’s cash conversation cycle. If a company pays its bills at the last possible moment while collecting cash quickly, the cash conversion cycle may be low and allow a company to have more cash. Contingencies for Recommendation If Mayo and other companies want to delay payment to enhance their company’s cash conversion cycle then Lawrence could institute a lock box system as a contingency. Lock boxes are methods to speed up cash collection while shortening mail times, processing times, and availability times. Lawrence should accomplish this by strategically locating them as close as possible to its business partners (Mayo, Gardner, and......

Words: 1032 - Pages: 5

Premium Essay

Lawrence Sports Inc.

...head: PROBLEM SOLUTION: LAWRENCE SPORTS INC. Problem Solution: Lawrence Sports Inc. Veronica S. George University of Phoenix/MBA550 Problem Solution: Lawrence Sports Inc. Lawrence Sports generates $20 million in yearly revenue by manufacturing and distributing sporting goods protective gear for team sports. The main issue with Lawrence is that they depend solely on world leading retailer Mayo for the bulk of their revenue and only have two sources for their materials. The problem begins when Mayo Stores decides not to pay on time leading to major cash flow problems downstream. This paper will look at Lawrence’s financial problem and create a working capital policy that will address their cash management needs for the long-term. Situation Analysis Issue and Opportunity Identification Lawrence Sports’ principle customer, Mayo Stores, is having a difficult time paying for the products on time. The current payment arrangement is that Mayo will pay 20% on purchases and 80% the following week. Mayo depends principally on this revenue from Mayo and it finds itself not being able to live up to the agreements made to their agreements to both creditors and suppliers. The only viable option detailed in the scenario is borrowing from Central Bank. Their plan is to borrow a daily loan for any amount to keep the account minimum of $50,000. Lawrence has reached the......

Words: 3076 - Pages: 13

Premium Essay

Problem Solution: Lawrence Sports Inc.

...Running head: PROBLEM SOLUTION: LAWRENCE SPORTS INC. Problem Solution: Lawrence Sports Inc. University of Phoenix Problem Solution: Lawrence Sports Inc. Presently Lawrence Sports has had to make some short-term decisions concerning its working capital management. In order to learn from this experience they will develop a working capital policy which will increase the predictability and efficiency of their cash. Working capital is defined as “the assets of a business that can be applied to the operations” or “the amount of current assets which exceed the current liabilities” (Answers, 2007, para. 1). Working capital management involves the “deployment of current assets and current liabilities as to maximize short-term liquidity” (The Free Dictionary, 2007, para. 1). The intent of a working capital management policy is to ensure an organization is able to continue business operations and has adequate ability to satisfy both short-term debt and upcoming operational expenses. Simply stated, “good management of working capital will generate cash, improve profits and reduce risks” (Anonymous, 2007, para. 2). Lawrence Sports, a manufacturer and distributor of sporting goods equipment, is currently facing a number working capital and cash flow management issues largely related to past due payment of their largest customer, Mayo Stores. This paper will take a closer look at Lawrence Sports’ simulation and identify the issues, goals, potential solutions,......

Words: 4380 - Pages: 18

Premium Essay

Lawrence Sports

...Lawrence Sports Problem Solution University of Phoenix MBA-550 January 19, 2008 Liquidity must become a primary focus for any business hoping to create sustainable growth. Lawrence Sports, a fictional company, is presently in need of capital management analysis and methodology overhaul. Included in this paper is a discussion of the issues, opportunities, values and solutions that the firm should be considering. The 9 step problem solution model is the format used to take the reader through critical identification, evaluation and implementation of elements that will transform a problem into new growth opportunity. Lawrence Sports is a $20 million dollar revenue company that assembles and distributes sporting goods. The focus of the scenario is to provide the opportunity for the student to develop solutions to trade off issues, thus establishing stability for the firm. Mayo, who is a retailer responsible for 95% of sales, is hindering Lawrence from paying raw materials suppliers. Unfortunately, this cash positioning problem is direct result of the Lawrence credit policy and the Mayo request to delay payment until the week of April 14-20. Borrowing money to deal with supplier payables is not an option, due to the $1.2 million dollar maximized bank limit. Therefore, this paper will strategize from the perspective of a financial manager who will turn a working capital problem into the chance to design a new credit policy, implement cash management models and......

Words: 4123 - Pages: 17

Premium Essay

Violence in Video Games

...Mental Destruction: Video Games          Video games have a detrimental effect on the minds of our youth. Individuals should limit their use of video games to ensure that they have the mental capacity to succeed in life outside of a virtual world. The effect of these visual stimulations goes further than the standard aggressive behavior due to the violent content in some of these games. Additionally it affects the mental levels that hinder a child's mind from benefitting from academic activities such as reading a novel or studying for an exam. Some say that these games offer children a safe release; a world to cause destruction where no one is being harmed. The truth is they are harming themselves severely. The gaming content is a huge factor that influences adolescents to commit violent crimes. Although violence isn’t the most common outcome, the quick satisfaction in the game play causes children to become unfocused on one subject for more than a few minutes.  This is one of the more long term effects that video games have on an individual. Games such as Saints Row, Call of Duty, Grand Theft Auto promote themes of violence, resulting in the answers to their problems. The player must make decisions that affect the fate of the characters in the game, usually involving killing the character as an option, which, usually, is the more favorable decision within the game. For some, the decisions that players make can transcend into real life. There are numerous news......

Words: 2516 - Pages: 11

Premium Essay

“Study on How Video Games Enhance the Mental Skills of a High School Student”

...Pamantasan ng Lungsod ng Maynila (University of the City Manila) College of Liberal Arts ________________________________ _________________________________ “Study on How Video Games Enhance the Mental Skills of a high school student” In partial fulfillment in English Proficiency Instruction II Submitted to: Prof. Maria Antonette Lofamia Submitted by: Gregorio, Fernan Joseph Panerio, Jose Mariel Date submitted: March 16, 2015 Chapter I Introduction For years video games have been criticized for making people more antisocial, overweight or depressed . But now researchers are finding that games can actually change us for the better and improve both our body and mind. Games can help to develop physical skills. Pre-school children who played interactive games such as the ones available on Wii have been shown to have improved motor skills, for example they can kick, catch and throw a ball better that children who don’t play video games. A study of surgeons who do microsurgery in Boston found that those who played video games were twenty-seven percent faster and made thirty-seven percent fewer errors than those who didn’t. Vision is also improved, particularly telling the difference between shades of grey. This is useful for driving at night, piloting a plane or reading x-rays. Games also benefit a variety of brain functions, including decision-making. People who play action-based games...

Words: 3724 - Pages: 15

Premium Essay

An Argumentative Research Paper on Research Topic: What Is Science?

...PERU E. M COLLINS COMMUNICATIONS SKILLS TERM PAPER ARGUEMENTATION STUDENT ID NO: D33/34238/2010 AN ARGUMENTATIVE RESEARCH PAPER ON RESEARCH TOPIC: WHAT IS SCIENCE? TOPIC: Dispelling Misconceptions; Physical and Natural Sciences are not superior over Social Sciences. TABLE OF CONTENTS Abstract. 3 Introduction 4 Recommendations 22 REFERENCES 25 Abstract. Science in general is a great and highly developed human enterprise. Its intricacies are clearly not limited to the scientists alone, but it is essential for the entire human race. If we think of science as a space within the larger space of society then it is at the interfaces between these two spaces that human beings are involved with science. To see this interface clearly from the space of science is not the same as seeing it as a mere collection of facts that should be construed to be true and nothing but the truth. Science is beyond facts, ideals and thoughts. It is a process and a model that has undergone tests, been tried, reviewed and accepted as a true representation of the processes and occurrences in the natural world However, due to the broad nature of science, and the work, time and resources involved in pursuit of knowledge in different science fields which entails different interests, and thereby different values too; and the......

Words: 9230 - Pages: 37

Premium Essay


...and a member of the team receiving the Hesburg Award for Educational Innovation TEACHING Teaching Role. My recent teaching has been in Rensselaer’s resident MBA program (both full and parttime), Professional and Distance Education Program and undergraduate programs. My research and teaching have made important contributions to efforts to build the marketing and management and technology curricula in the School of Management at Rensselaer and at other universities who have adopted our teaching materials. As a pioneer in interactive leaning material on product development and manufacturing, I have developed several interactive multimedia cases and collaborated on the development of simulations designed to teach marketing principles and bridge management and engineering disciplines. The simulations teach marketing, design and manufacturing concepts by exposing students to tradeoffs inherent in new product development. They help provide an understanding of design, manufacturing, and marketing decisions, as well as cash and investment flows, inventory management, and product planning. These materials have been used by several universities in the U.S. and abroad, as well as in the training...

Words: 9701 - Pages: 39

Premium Essay


...extravaganza, complete with exciting halftime shows and peppy cheerleaders. The game exemplifies national pride. The national anthem is played, flags are unfurled, and uniformed players charge up and down the field like an army in the throes of often violent conflict. The teams’ huddles divide the game into small planning sessions for the next play. In the United States, the National Football League (NFL) oversees the sport and, like any successful business, wants to score in new markets. The NFL first tackled Europe in 1991, with plans to establish American football there. After years of failed attempts, NFL Europe emerged as six teams, five of which were based in Germany (such as the Berlin Thunder, the Cologne Centurions, and the Hamburg Sea Devils). Earlier teams established in Spain had failed. Why did American football triumph in Germany but fail in Spain? An excellent metaphor for Spanish culture is the bullfight, an ancient pursuit. In tradition-bound Spain, bullfights are often held in 2,000-year-old Roman amphitheaters. Rather than a competitive sport, bullfighting is a ritual and an art. It is the demonstration of style and courage by the matador, the hero who...

Words: 18507 - Pages: 75