Running head: PROBLEM SOLUTION: LAWRENCE SPORTS INC. Problem Solution: Lawrence Sports Inc. University of Phoenix December 13, 2008 Problem Solution: Lawrence Sports Inc. Introduction The textbook Principles of Corporate Finance describes Working Capital as “Current Assets and Current Liabilities”(Brealey et al, 2005). Managers of the working capital process must continuously monitor accounts payable, accounts receivable, cash and inventory of their companies. The effective management of working capital provides a company with the capability to contend with other businesses and to thrive in the marketplace. The manager of working capital must also take into consideration the repayment of loans and debts and the collections of accounts in arrears. Essentially, the manager of working capital must be like a juggler, trying to pay off the lenders with the money collected from borrowers, at the same time trying to meet all of the current commitments. With this information in mind, the purpose of this document is to provide Lawrence Sport an effective solution to maximize working capital while enabling them to meet their current and long–term obligations. Situation Analysis Lawrence Sports is a 20 million dollar revenue company that manufactures and distributes equipment and protective gear for baseball, football, basketball, and volleyball. Lawrence Sports primary customer is Mayo Stores, the world’s leading retailer. Additionally, Lawrence obtains all of its raw materials from Gartner Products and Murray Leather Works. Since Lawrence receives a vast majority of its revenues from only one company, Mayo Stores, any delay in collecting accounts receivables can be potentially catastrophic. Additionally, by using only two companies as suppliers, Lawrence leaves itself in a problematic situation. If one or both suppliers become displeased with the Lawrence business practices, then the suppliers may decide to stop doing business with Lawrence. Issues Lawrence...