Lawrence Sports Evaluation Simulation

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Lawrence Sports Simulation Evaluation FIN/571 Corporate Finance January 14, 2013 Charles Andre Lawrence Sports is a $20 million revenue company that manufactures and distributes equipment and protective gear for baseball, football, basketball and volleyball. The company has three business partners Mayo Stores, Gartner Products and Murray Leather Works. This simulation deals with working capital management. Working Capital Management is the day to day management of cash, collections, bad debts, disbursements, future revenues, borrowing, and loan repayments. This simulation is a start to the beginnings of a finance manager’s responsibility to maintain the cash flow management of the company. Working Capital Management aims to achieve the balance between having sufficient working capital to ensure that a business is liquid but not too much that the level of working capital reduces the profitability of the business. Lawrence Sports needs to have a minimum of $50,000 in cash at the end of each month after all expenses are paid. In order to maintain the required balance of $50,000 at the end of each month, the managers has to be effective in maintaining inventories, accounts receivable, and accounts payable. It is very important for Lawrence Sports to maintain a positive business relationship with their partners. Maintaining a positive relationship with suppliers and customers is a key entity in keeping the business successful. The finance manager has to ensure that the suppliers are being paid in a timely manner in regards to agreements, terms and conditions and he must also make sure the customers are paying Lawrence Sports in accordance to agreements, terms and conditions. This relationship works both ways and the finance manager must work diligently to ensure that Lawrence Sports obligations are met, so the company can pay their bills without

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