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Lawrence Sports

In: Business and Management

Submitted By rorychin
Words 4123
Pages 17
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 introduce risk mitigation techniques. A credit policy that is too liberal will continue to cause damage to Lawrence Sports. Presently both receivables and payables are unsynchronized, which is putting undue financial distress on the firm, as well threatening supplier relationships that have helped build the company. Considering the dominant sales role that Mayo plays in the supply chain,...

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