...Running head: PROBLEM SOLUTION: LAWRENCE SPORTS INC. Problem Solution: Lawrence Sports Inc. University of Phoenix Problem Solution: Lawrence Sports Inc. Presently Lawrence Sports has had to make some short-term decisions concerning its working capital management. In order to learn from this experience they will develop a working capital policy which will increase the predictability and efficiency of their cash. Working capital is defined as “the assets of a business that can be applied to the operations” or “the amount of current assets which exceed the current liabilities” (Answers, 2007, para. 1). Working capital management involves the “deployment of current assets and current liabilities as to maximize short-term liquidity” (The Free Dictionary, 2007, para. 1). The intent of a working capital management policy is to ensure an organization is able to continue business operations and has adequate ability to satisfy both short-term debt and upcoming operational expenses. Simply stated, “good management of working capital will generate cash, improve profits and reduce risks” (Anonymous, 2007, para. 2). Lawrence Sports, a manufacturer and distributor of sporting goods equipment, is currently facing a number working capital and cash flow management issues largely related to past due payment of their largest customer, Mayo Stores. This paper will take a closer look at Lawrence Sports’ simulation and identify the issues, goals, potential solutions, evaluate...
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...Lawrence Sports Working capital management is very important in running a business because it involves managing all current assets and liabilities. Working capital management involves making appropriate investments in cash, marketable securities, receivables, and inventories, as well as the level and mix of short-term financing (Emery, Finnerty, Stowe, 2007, p. 639, para. 3). Currently Lawrence sports, a multi-million dollar company that manufactures and distributes sports equipment is seeking a way to better manage its’ capital, lower loan burdens, and undertake better business deals with its’ three business partners. Management can solve this issue with working capital policies that reduce future difficulties. Alternative Working Capital Policies As the newly appointed finance manager, one must be fully aware of the companies operating expenses, principal source of finance, suppliers and current financial stance and process with the lending bank. Understanding how all of these relationships can cohesively work together is key to being a success in this new role. By being properly prepared and developing successful working capital policy, the company will always have balanced receivables and payables due to working and negotiating with Lawrence Sport’s customers and suppliers. This type of communication and action plan will result in optimizing revenue, decreasing cash borrowed turn-around time, positive business relations and maintaining positive cash balance thus...
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...Cash Management Policy Lawrence Sports can reduce future difficulties by improving productivity of cash flows and monitoring market securities. This can be done by implementing a cash management policy that will work to ensure there is enough cash for transactions and also ensure there are not excess amounts of cash. The policy will establish sound cash management practices, allowing for the efficient application of cash, consistent with Lawrence Sports company objectives. Reviewing cash balances and adjusting appropriation drawdowns will be done so on a regular basis. Market securities will be considered because they too are liquid in terms of funds and can be moved quickly and cheaply (Emery & Finnerty, 2007). A working cash limit will depict the maximum amount of cash that is necessary to meet commitments that are associated with regular payments. The financial officer will be responsible for monitoring account activity and balances so there is enough cash to meet company obligations as they become due. Reviewing balances and adjusting appropriation drawdowns will be done so on a regular basis. The policy will also work to maintain adequate financial booking hence cash related transactions will be recorded and approved by those individuals delegated for making approvals. Lawrence sports must work to process cash disbursement transactions promptly and also reconcile all cash daily. Evaluation of the Risk The learning team recommends Lawrence Sports use the cash management...
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...Cash Management Policy Lawrence Sports can reduce future difficulties by improving productivity of cash flows and monitoring market securities. This can be done by implementing a cash management policy that will work to ensure there is enough cash for transactions and also ensure there are not excess amounts of cash. The policy will establish sound cash management practices, allowing for the efficient application of cash, consistent with Lawrence Sports company objectives. Reviewing cash balances and adjusting appropriation drawdowns will be done so on a regular basis. Market securities will be considered because they too are liquid in terms of funds and can be moved quickly and cheaply (Emery & Finnerty, 2007). A working cash limit will depict the maximum amount of cash that is necessary to meet commitments that are associated with regular payments. The financial officer will be responsible for monitoring account activity and balances so there is enough cash to meet company obligations as they become due. Reviewing balances and adjusting appropriation drawdowns will be done so on a regular basis. The policy will also work to maintain adequate financial booking hence cash related transactions will be recorded and approved by those individuals delegated for making approvals. Lawrence sports must work to process cash disbursement transactions promptly and also reconcile all cash daily. Evaluation of the Risk The learning team recommends Lawrence Sports use the cash management...
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...Capital Policy In the months illustrated Lawrence Sports struggled with working capital management. Lawrence Sports must work closely with its clients and lenders to manage cash flow not only to manage working capital but to grow into a viable company. Lifland (2011) says, “The efficient management of these assets includes maintaining adequate product levels, monitoring of appropriate credit/payment terms, and mitigating any situation where the servicing of the working capital may significantly constrain the firm’s cash position. Lawrence Sports must implement alternative working capital policies to effectively monitor working capital in the short term to include lending, monitor working capital monthly, negotiating short-term and implementing supplier agreements to negotiate client payment strategies. Most importantly, Lawrence Sports must more closely monitor working capital to evaluate cash flow and profitability. Lawrence Sports must maintain adequate cash to decrease loan requirements. Monthly monitoring of working capital can assist managers in making effective financial decisions. In monitoring working capital, management may also evaluate appropriate policies to increase profitability and reducing costs. Lawrence Sports currently holds an automatic credit line with the bank that will provide credit within $50,000 balance each month. Monthly short-term loans involve additional costs. With the continued relationship Lawrence Sports has created with the bank the company has...
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...Lawrence Sports Simulation Lawrence Sports experienced difficult times in March and April when their biggest consumer could not pay for its products. Because of this, the cash conversion cycle was examined as well as the working capital management presently used. Additional views were studied to determine the best course of action for the company. Although multiple factors play a role in determining the best working capital management policy, Team D will offer recommendations and how each philosophy would be beneficial for Lawrence Sports. Cash Conversion Cycle Emery, Finnerty, and Stowe (2007) summarized that “the cash conversion cycle is the length of time between when a firm pays its accounts payable and when it collects on its accounts receivable and is equal to the inventory conversion period plus the receivables collection period minus the payables deferral period” (p. 659). The initial start for the cash implementation plan would be to create and demonstrate a vendor program, such as a payable deferral period program and create longer cash conversion cycles for floating payment programs for payments going to the banks. Next pre-arrange the short term borrowing program by using short term marketable securities. The Lawrence Sports Company financial departments need to begin following strict money formulas before any transactions pertaining to the market are made. Then it would be smart to hold cash balances for pertinent needs. This will allow and open doors for...
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...Lawrence Sports Simulation: Managing Liquidity Lawrence Sports Simulation: Managing Liquidity This paper will discuss the three alternative working capital policies that manage working capital. Team D will identify the policy in which the team believes that Lawrence uses and will then make a recommendation on what policy Lawrence Sports should continue to use. This paper will then go on to include an evaluation of the risks that are associated with each of the policies as well as discuss the contingencies for the policy in which is recommended. This paper will also discuss the performance measures that could be used to evaluate the team’s recommendation. Finally, this paper will discuss an implementation plan for the team’s recommendation. Alternate Capital Policies Current Policy (Conservative Approach) The current policy in place at Lawrence is one that can be considered a conservative approach. The Conservative Approach uses long-term financing for the company’s long term assets, a few of the company’s temporary current assets, and all of the company’s permanent current assets (Emery et al., 2008). This has resulted in high costs of financing for Lawrence Sports with little risk; causing the company’s profitability to be low. Simply put; Lawrence has predominantly financed all of its current assets using long-term sources of financing where only a small portion of its assets sing short-term financing. This presents the risk of Lawrence developing a liquidity issue...
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...Lawrence Sports can implement an aggressive approach as an alternative working capital policy. This policy uses less long term and more short-term financing (Emery, Finnerty & Stowe, 2007). Short -term financing is more cost efficient with comparison to the long term financing. Lawrence Sports would experience a profit increase under this policy. This approach has high risk and often high return, as we know from the principle of Risk-Return Trade-Off that without some sort of market imperfection, higher expected profitability comes only at the expense of greater risk (Emery, Finnerty & Stowe, 2007). The main idea is to collect payments on time, leaving no debtors, invest that amount in the business and pay the creditors as late as possible. With that said, a short term aggressive approach is ideal only if the firm expects decline in interest rates. There are risks associated with this aggressive financing approach include higher interest rates, the potential for accounts receivable default, and credit limitations. Therefore, Lawrence Sports have to be prepared to take different actions that are needed in times of tight periods in the capital cash flow. The company can negotiate with current creditors to stretch the account payable, also, to identify and create a list of potential creditors that would be executed in the event there are issues with the existing creditor relationship. Lawrence Sports’ finance manager should also identify and create a similar list with relevant...
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...Lawrence Sports Simulation FIN/571 Corporate Finance Prof. Ricardo Rivera Matos May 29, 2012 University of Phoenix * Lawrence Sports Simulation * The process of taking risks will define if a company will emerge from a financial situation. The business relationships will suffer, but if the high risk is in a short term basis, probably this will help both parts to comprehend why is important to keep good finance health when an emergency situation occurs. * Lawrence Sports is a 20 million revenue company that manufactures and distributes equipment and preventive gear for baseball, football, basketball, and volleyball. Mayo Stores is the principal customer of Lawrence Sport. Mayo also is the world leading retailer, with 3,000 stores with operations in United States, Canada, South America, and Europe. Lawrence sources all its materials from Gartner Products and Murray Leather Works. * Robert Dent is the Key Account Manager of Mayo Stores. He has shown an impressive track record in building and excellent and profitable relationship with Mayo. Ann-Wu Head is the head of vendor relationship. She feels that Lawrence Sports’ bargaining power with Gartner is restricted since Lawrence Sports is not a major customer for Gartner. She finds Murray the more flexible of the two vendors and she is looking for more vendors like them. She feels that Murray is likely to run deep financial troubles if Lawrence Sports stretches payment beyond a limit. * As managers we...
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...Drtduxfy.d,ljk/’;fyux,ldryujy * * Assessing The Goal Of Sports Products, Inc. Case Study September 24, 2012 John Rapa Assessing the Goal of Sports Products, Inc. case study Introduction Sports Products Inc. is a large producer of boating... Premium * Assessing The Goals Of Sports Products Inc Assessing the Goals of Sports Products, Inc. Case Study Paper What should the management of Sports Products, Inc., pursue as its overriding goal? Why What... Premium * Case Analysis: Assessing The Goal Of Sports Products, Inc. Case Analysis: Assessing the Goal of Sports Products, Inc. Submitted by: Group 1 Acebedo, Gladys Bandiola, Penuel Bautista, Jherwienne Cruz... Premium * Assessing The Goals Of Sports Products, Inc. Assessing the Goals of Sports Products, Inc. Assessing the Goals of Sports Products, Inc. Establishing and monitoring goals of any organization can be a... Premium * Assessing The Goal Of Sports Products, Inc. Maples University of Phoenix Finance for Decision Making FIN/419 Thomas Ster November 19, 2012 Assessing the Goal of Sports Products, Inc. Loren Seguara... Premium * Assessing The Goal Of Sports Product the firms stock price is falling. The management of Sports Products, Inc. should pursue its overriding goal by understanding the objectives needed for the firms... Premium * Assesing The Goal Of Sports Products, Inc specific recommendations would you offer the firm? Ans: From the information available in the case study, we...
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...Assessing the Goal of Sports Products, Inc. Lance Langdon University of Phoenix FIN/419 J. Jesse Conques, Facilitator March 15, 2009 Introduction Sports Products Inc. is an important manufacturer of boating gear and accessories. The textbook case under consideration centers on the clerical assistant - Loren Seguara employed by the company’s accounting department. Another personality in the case is Mr. Dale Johnson employed in the company’s shipping department in the position of packager. The dilemma in the case concerns the complaints of Dale and Loren’s discussion during their lunch break concerning profits and stock dividends. Dale grumbled that even though he was working hard to keep overhead costs down in his department; he did not feel the company was recognizing his efforts. While performing his duties Dale feels he is putting his best efforts toward his perception of cost control by not wasting packing supplies and as well as using company property in an efficient and in a cost-effective manner. However, even though Dale feels he is carrying out his work with full efficiency as is his group of co workers in his department, the result is a downturn in the company stock price by almost $2 a share over the last nine months. What should the management of Sports Products, Inc. pursue as its overriding goal? Why? The overriding objective of the company management of Sports Products needs to focus on how to maximize the assets of the...
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...The word “personality” is comes from the Latin word persona meaning mask (B. R Hergenhahn, 2007). Personality has been defined and explained in different ways by various persons hence several theories of personality exists, each highlighting different aspects of human nature that theorist is the most important determinants of one’s personality. Personality refers to those characteristics of a person that accounts for consistent patterns of feeling, thinking and behaving (Lawrence A. Pervin, 2005). Due to the multifaceted nature of human beings, no one paradigm or theory can be said to perfectly or correctly explain personality each may focus on particular aspects and neglect other aspects. All the theories however, agree one thing; that people differ from each other as is the case with Natasha and her brother Akeem. This essay examines Natasha’s personality in light of Social Cognitive theory (STC) as posited by Albert Bandura and Walter Mischel, and the Existential theory of Carl Rogers. Social Cognitive Theory (SCT) has its roots in learning theory emphasizing the social origins of behavior, and the importance of cognitive thought processes, in all aspects of human functioning (Pervin & John, 2001). SCT is founded on the thought that humans learn what they observe, whether it be from the consequences of our behaviors or that of others; via direct or vicarious reinforcement or punishment. (B. R Hergenhahn, 2007) The theory identifies human behavior as an interaction...
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...Darden Restaurants From Wikipedia, the free encyclopedia Jump to: navigation, search Darden Restaurants, Inc. | | Type | Public | Traded as | NYSE: DRI[1] S&P 500 Component | Industry | Restaurant | Predecessor | Green Frog Restaurant (1938-1967) Red Lobster Inns of America (1968-70) General Mills Restaurants (1970-95) | Founded | First Restaurant (The Green Frog) opened in 1938 in Waycross, GA. | Founder | Bill Darden | Headquarters | 1000 Darden Center Drive Orlando, Florida, U.S. 32837 | Number of locations | More than 1,500 - 2015 Annual Report | Area served | Worldwide | Key people | Eugene Lee (President & Chief Executive Officer) Jeffrey Smith (Chairman) | Services | Foodservice | Revenue | US$ $7.999 billion (FY May 2012)[1] | Operating income | US$ 638.0 million (FY 2012)[2] | Net income | US$ 475.5 million[1] | Total assets | US$ 5.944 billion (FY 2012)[2] | Total equity | US$ 1.842 billion (FY 2012)[2] | Number of employees | 200,000[1] | Website | darden.com | Footnotes / references [3][4] | Darden Restaurants, Inc. is an American multi-brand restaurant operator headquartered in Orlando.[3] The firm owns several casual dining restaurant chains: Olive Garden, LongHorn Steakhouse, Bahama Breeze, Seasons 52, Eddie V's Prime Seafood, The Capital Grille and Yard House. Until July 28, 2014, Darden also owned Red Lobster. Darden has more than 1,500 restaurant locations and more than 150,000 employees, making...
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...STUDY ANALYSIS: EXXON VALDEZ OIL SPILL Submitted by: Chaira Mae C. Aguilar Submitted to: Prof. ROEL S. RAMIREZ, APR January 11, 2016 I. SUMMARY and SYNTHESIZE In March 1989, the oil tanker Exxon Valdez underwent an accident in Prince William Sound in Alaska. This accident resulted in a massive oil spill, where more than 10 million gallons of crude oil leaked into the sea. Exxon’s problems were worse by its lack of preparation and bravery in dealing with the situation. Lawrence Rawl, CEO, stayed out of the public view for almost a week after the incident happened. After a meeting, he faced the demonstrators and stakeholders. He took all the responsibility and promised an investigation. Facts According to Office of Response and Restoration, with this banishment institutionalized in U.S. law, Exxon Shipping Company shifted the operational area to the Mediterranean and Middle East and renamed it. In 1993, Exxon spun off its shipping arm to a subsidiary, Sea River Maritime, Inc., and Exxon Mediterranean became the Sea River (S/R( Mediterranean. In 2002, the ship was re-assigned to Asian routes and then temporarily mothballed in an undisclosed location. According to The Whole Truth, Exxon, along with the rest of the oil industry knew that navigating a large supertanker through the icy and treacherous waters of Prince William Sound was extremely complicated. Armed with this knowledge the oil companies promised to use great care to avoid a spill. Exxon broke the...
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...THE GLOBAL SPORTS AND CLOTHING INDUSTRY – NIKE INC.. In 2000 Nike enjoyed 45% of a global market share, and had close to $9 billion dollars of sales and put Knight among the top ten richest individuals in the United States. The company directly employed 20,000 people, but had a workforce of an estimated half a million labouring for them in 565 contract factories in 46 countries – making it one of the largest private company de facto employers in the world (De Wit and Meyer 2004). Instructions: * ANSWER ALL THREE QUESTIONS * You are expected to use the information in the case study ‘Nike’s dispute with the University of Oregon’ by Morris J.R. and Lawrence A.T. cited in De Wit, B. and Meyer, R. (2004) Strategy: Process, Content, Context. An International Perspective: Thomson Learning, London, Third Edition, pp. 933-940, and your own understanding of the process of strategy, strategy content and strategy context and your own additional research information. * Your answer should be based on critical ‘internal’ and ‘external’ environmental analyses using appropriate analytical techniques. Question One: In this case there are several primary and secondary participants who have differing degrees of influence. Identify the four main participants in this case. What are their financial interests and why do you consider them to be of primary importance in this case? [30 marks] Question Two: a) Contrast and compare Mintzberg et al’s (1998)...
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