StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Working Capital Management Simulation - Essay Example

Cite this document
Summary
In this essay, the author demonstrates how Lawrence Sports is Murray’s major customer and why it is willing to do anything to please Lawrence Sports to keep them as a customer. And how does Lawrence Sports balance the ethical issue of possibly putting Murray out of business?…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER98.6% of users find it useful
Working Capital Management Simulation
Read Text Preview

Extract of sample "Working Capital Management Simulation"

Download file to see previous pages

Lawrence Sports could also charge their sales team to increase sales efficiency.  Currently, Mayo is the leading consumer for Lawrence Sports causing a large amount of capital to be missing if payments are delinquent.  If Lawrence Sports offer an incentive, like a bonus, to encourage their sales team to push out more sales to other consumers, then this would also be an option to increase working capital.         Next, consider Lawrence Sports’ payments to their suppliers.

  Delayed payments may cause a supply shortage.  One alternative to keep from delaying payments would be to apply for a consolidation loan that hopefully has a better interest rate than the line of credit currently being used.  If the right loan can be found, the company can avoid late payments on the line of credit by paying it in full with the consolidation loan.  In turn, the consolidation loan can offer the company smaller payments over a longer period of time than the line of credit.

  There are risks to this alternative.  Taking on to much debt could ultimately lead to bankruptcy if payments can’t be made.  However, by proper debt management, this plan can keep the suppliers happy because the company hasn’t become delinquent in their own payments.         In the simulation, Lawrence Sports’ need to improve its cash flow may lead to delaying payment to Murray who is very dependent on Lawrence Sports.  This delay in payment could in turn cause Murray to go out of business because the company relies on Lawrence Sports’ business.

  Is it ethical for Lawrence Sports to put a company out of business to improve their own business?  It is not ethical to put a company out of business by delaying payments if payments could be easily afforded.  However, Lawrence Sports is having difficulty making payments due to a financial problem with its major customer.  If Lawrence Sports chooses to make payments on time at the expense of their own welfare, then there is a possibility that they may go out of business themselves. 

...Download file to see next pages Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Working Capital Management Essay Example | Topics and Well Written Essays - 500 words”, n.d.)
Retrieved from https://studentshare.org/business/1511688-working-capital-management-essay
(Working Capital Management Essay Example | Topics and Well Written Essays - 500 Words)
https://studentshare.org/business/1511688-working-capital-management-essay.
“Working Capital Management Essay Example | Topics and Well Written Essays - 500 Words”, n.d. https://studentshare.org/business/1511688-working-capital-management-essay.
  • Cited: 0 times

CHECK THESE SAMPLES OF Working Capital Management Simulation

Lawrence Sports Simulation

This paper will suggest an alternative working capital policy for Lawrence Sports in order to reduce several future difficulties.... To be specific, it is recommendable for Lawrence Sports to follow a moderate working capital policy.... 25), a moderate policy is the one between relaxed working capital policy and restricted working capital policy extremes; and under a moderate working capital policy, an organization neither adopts a liberal credit approach nor a restricted credit approach....
3 Pages (750 words) Essay

Working capital

working capital(Mcmenamim,1999) is defined as the difference between total assets and total liabilities.... working capital is one of the financial statement ratios that users of the financial statements analyse to determine whether the business is going on a straight an beautiful path of continuous net income for the past year or years of operation. … The working capital(Aryeetey,1998) is also one of the many financial management tools used by the financial statement users to determine whether the business will continue to survive in the near or even far away future years....
13 Pages (3250 words) Essay

Working Capital Management

Third, levels of fixed and current assets depend upon the expected sales, but it is only current assets which can be adjusted with sales fluctuations in the short run therefore company has greater flexibility in managing current assets. Gross working capital: It refers to the firm's investment in current assets.... Net working capital: It refers to the difference between current assets and current liabilities.... Net working capital has been increased YoY but it's difficult to assume that how much working capital is required by the company in the existing business as no industry standard or benchmark standard is not provided....
4 Pages (1000 words) Essay

Working capital management

This section further divided into three parts, the first one deals with research philosophy that I adopt and second one with research approach and third one with research… Research philosophy describes the way I think about the development of knowledge which affects the way I go about doing research....
12 Pages (3000 words) Essay

Peculiarities of Working Capital Management

This coursework describes the peculiarities of working capital management.... This paper explains the necessity of working capital management, different methods, working capital management in a UK company, and in a manufacturing company.... nbsp;… working capital management is much needed to make the business run both productively and profitably.... The working capital management takes the concept of managing inventories, cash, receivables and payables, and the short term funding....
7 Pages (1750 words) Coursework

Working Capital Case Study: Target Corporation

The working capital(Current Assets – Current Liabilities) of the company has marginally reduced from $ 7124 for the year 2007 to $6976 for the year 2008.... The recommendations for improving the working capital situation are: 2) The working capital position of the company is effected by the huge receivalbes in the credit card segment.... This would result in cash inflow and would improve the working capital position of the company....
3 Pages (750 words) Essay

Working Capital

working capital of a firm or a business is calculated as the current asset minus the current liabilities… The balance sheet of superior shows a working capital of 33,200 in 2001, 35,400 in 2002 and 34,750 in 2003.... This means that the liquidity of the firm is positive and working capital Presented by (Your school) Sure to focus on working capital, current ratio, short-term and long-term debt.... orking capital working capital mainly is concerned with the liquidity of operation of a company....
1 Pages (250 words) Research Paper

Working Capital Management: Strategies and Techniques

This integrative report “working capital management: Strategies and Techniques” is on the function of marketing with reference to how factors outside of the marketing function impact upon marketing efforts.... The report takes the help of Sam's Tailor, a fashion retailer in the Hong Kong market....
12 Pages (3000 words) Dissertation
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us