Lawrence Sports
...major home appliances and Nike, Incorporated which is primarily engaged in the manufacture and distribution of footwear products. Focusing on their working capital strategies, cash budgeting, cash flow analysis, best practices in working capital in a given industry, evaluation of risks and opportunities, and ethical implications of competing working capital alternatives of these companies. In addition the research provides alternative solutions for Lawrence sports and generic benchmarking.
Introduction
The purpose of this paper is to identify best practices in the field of working capital strategies and to apply them to the Lawrence Sports scenario. The paper contains working capital strategies, cash budgeting, cash flow analysis, best practices in working capital management, evaluation of risks and opportunities, and ethical implications of competing working capital alternatives. This research will provide recommended policies to establish at Lawrence to avoid future cash flow disruptions.
Optimal Working Capital Strategies
Working capital management is the art of ensuring that an organization has enough cash to maintain ongoing operations, satisfy maturing short-term debt and handle emergency situations without maintaining too much cash resulting in inefficient use of capital (Working capital management, 2007). Sound working capital management strategy involves managing cash on hand, recovering cash from sales as quickly as possible and delaying cash payments.
Working Capital Strategies
Working Capital, the company's cash cycle, is a big part of its earnings value.
The quicker a company can turn over their inventory, the greater the operation cash flow will be due to faster collections of their account receivables and/or the ability to stretch out payables. Changes in the current credit policy could help in Lawrence's cash flow problems....
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