Lawrence Sports Situation Analysis

Lawrence Sports Situation Analysis

  • Submitted By: eletrikbro
  • Date Submitted: 02/21/2009 10:45 AM
  • Category: Business
  • Words: 4418
  • Page: 18
  • Views: 777


Problem Solution: Lawrence Sports Inc.
University of Phoenix

Problem Solution: Lawrence Sports Inc.
Lawrence’s Sports (LS) manufactures and distributes protective equipment for contact sports (UOP, 2008). LS operational income totals $20 million dollars annually and requires diligent management of working capital in order to meet customer expectations, and fulfill obligations to service shot-term financing and suppliers. In order to manage the cash needs of the organization LS must balance the needs of Mayo, who contributes to 95% of LS sales, though accounts receivables. LS must also find opportunities develop collective ventures with suppliers that will help to manage accounts payable without alienating suppliers or placing them at risk for closure caused by excessive extensions on accounts payable. A clearly defined cash management policy will help to limit the use of short-term financing to cover short falls in LS working capital, and will help to improve the efficiency of LS cash conversion cycle.
“Planning is bringing the future into the present so that you can do something about it”
-Alan Lankein

Situation Analysis
Issue and Opportunity Identification
Terms of sale are lines of credit extended to companies, which offers a stipulation for the receipt of payment with discounted rates for on time payments (Brealey,, 2005). The promise to pay on domestic accounts allow for drafts to be created, which allow banks to post payments based on confirmed shipping receipts. (Brealey, et. al, 2005). LS was required to Renegotiation their accounts payable terms with Gartner and Murray. Through the process of renegotiation LS had to also consider accelerating their AR from Mayo while extending the AP to Gartner and Murray. The impacts of the negotiation were designed to improve the cash on hand for LS and reduce the need for short-term financing. The decisions made by LS...

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