Lawrence Sports

Lawrence Sports Team Paper
University of Phoenix
January 12, 2010

Lawrence Sports
Working capital management is the link between a company's “short-term assets and its short-term accountabilities” (Study Finance, 2010).The purpose of working capital management is to make sure that a company can maintain its daily “operations” and that it have enough capability to satisfy both growing short-term debt and future operating cost” (Study Finance, 2010). Working capital management includes “managing inventories, accounts receivable and payable, and cash” (Study Finance, 2010). Constantly, watching how much capital inflow and outflow, and funds are stored away must be maintained for a company’s success.
Lawrence Sports is a manufacturer and distributor of sporting goods equipment and currently has revenues of $20 million along with a line of credit for $1.2 million (University of Phoenix, 2010).   Lawrence Sports have two primary suppliers Gartner Products and Murray Leather Works.   According to the scenario, “Mayo Stores is the world's leading retailer, Lawrence Sports primary customer, and accounts for 95% of the company’s sales” (University of Phoenix, 2010). Mayo Stores has “defaulted on 80%” of their outstanding payments, therefore, Lawrence Sports can not meet their financial obligations” (University of Phoenix, 2010). As a result, Lawrence Sports is “stretching payables” to Gartner Products and Murray Leather Works to meet other corporate expense obligations (University of Phoenix, 2010). By Lawrence Sports “stretching their payables”, the company worn out their line of credit with the bank (University of Phoenix, 2010).   This paper will identify Lawrence Sports' issues, goals, evaluate risks and mitigations, and define metrics and measures to deal with the short-term and long-term financing needs of the company (University of Phoenix, 2010).
Lawrence Sports’ working capital management is multi-faceted as most all-financial business plans are. There are...