Introduction
Lawrence Sports has reached a point where assessing their working capital strategies is imperative. Unforeseen situations have left Lawrence Sports scavenging for cash funds. To prepare for such situation Lawrence Sports should conduct benchmarking. Provided below are 10 synopses. Benchmarking has also been conducted to help select working capital strategies that would prepare Lawrence Sports for long-term opportunities, explain the purpose of cash budgeting, perform cash flow analysis, identify best practices in working capital management in a given industry, evaluate the risk and opportunities of working capital strategies and an analysis of the ethical implications of completing working capital alternatives Team D’s recommendations should assist Lawrence Sports in stabilizing their cash flow and budgeting for the unforeseen.
Working Capital Strategies to Prepare for Long-term Opportunities
Lawrence Sports needs to select a working capital strategy, which prepares them for long-term opportunities. Should Lawrence Sports grant or refuse credit to their customers; both come with pros and cons. The decision to not offer credit will put a cap on Lawrence Sports customer base but will allow cash flow not to be delayed. Offering credit allows companies to charge higher prices and an increase broadens the customer base. Lawrence Sports should check the Net present value of granting credit; this will show which will increase working capital. Safeway decided not to grant credit to their customer base. With Safeway’s massive customer base there was not a need make the company susceptible to the cash flow risks involved. If Safeway were to grant credit they would have to deal with bad debts and create a credi ...