Lawerence_Sports

Lawrence Sports generates $20 million dollar revenue organization that manufacture and distributes a variety of sport equipment. The team C consultants were tasked with simulating the business processes and making three alternatives recommendations for working capital policies to improve the business operations and cash flow. Team C consultants’ observations will include an evaluation on the risks associated with each of the recommendations, contingencies for the recommendation, and performances measures. Taking chances and not evaluating the company condition can reduce Lawrence Sports' profits. Team C consultants’ will put together an implementation plan for Lawrence Sports to increase cash flow, capital management and cash conversion cycle.             The Lawrence Sports Simulation is focused on working capital management and how best to resolve cash flow with short term or long term borrowing. Working capital management is how management uses current (short-term) assets and liabilities (Emery, 2007). Lawrence Sports are to manage cash flow while maintaining a positive vendor relationship. The vendors are important to the company; they sell the supplies used for manufacturing products and also market the end product for sale. Team C consultants need to create three alternative working capital policies. Lawrence Sports is in a position to incorporate these alternative working capital and they will permit the organization to grow to be a successful organization. One alternative working capital policy recommendation is time-value-of-money. The time-value-of-money is an important financial concept. When organizations establish proposals for working capital policies, they realize improvement can do extremely well and enhance working capital (Time Value of Money, 2010). “Working capital involves using appropriate investments in cash, marketable securities, receivables, and inventories” (Emery, 2007). According to Newton, The time value of money is a basic monetary principle. Its basic basis is that money gains worth over time. As a result, a dollar saved in present time will be worth more in the future, and a dollar paid now costs more than a dollar paid later. The reason for the growing value in money over time is that money can be invested to bring in interest, and the increase in interest can be considerable over time. This is why a dollar paid now costs more than a dollar paid in the future. The concept of time value of money is a significant reflection in any long-term, and short-term, investment or economic responsibility. Financial managers and advisers regularly use time value of money formulas to decide the accurate costs of different investment opportunities. Lawrence Sports has to consider the time value of money concept when making ordinary financial decisions, such as whether to take out a loan or mortgage, sign a lease, deposit money in a savings account or an annuity or to spend the cash or pay bills (Newton 2008).             The second advantage for Lawrence Sports Simulation is principal of diversification. Focusing on diversification and spreading the investments into different options creates a portfolio with assets that carry lower risk. Investing in different investments can bring a higher return while posing a lower risk and diversification can prevent unsystematic risk events. Diversity in structure across a variety of stocks that do not have much in common and asset allocation make the most in the equity market.             A third recommendation for Lawrence Sports is negotiation. Lawrence Sports has to negotiate the terms and agreement of the current organization. Lawrence Sports will have to establish terms and agreement to maintain the current buyers and compromises. Within this agreement, there must be rules of what is accepted and what is not. Short and long-term goals are very important to have and it is a great idea to strive for them daily. Lawrence Sports has to work toward goals and not from the current position (The Roberts (2002-2010). The most important thing to remember is that Lawrence Sports must be prepared to encounter some difficult negotiations (Roberts, 2002-2010).Time Value of Money. (2010).  References: Emery, D., Finnerty, J., and Stowe, J., Corporate Financial Management, Third Edition. 2007 Retrieved from:  https://ecampus.phoenix.edu/ on October 19, 2010 Newton, H. (2008). Time Value of Money. (p. 1). Great Neck Publishing. Retrieved November 6, 2010, from Research Starters - Business database Roberts, A. (2002-2010). Basic negotiating tips. Retrieved November 2, 2010, from http://www.helium.com/items/141164-basic-negotiating-tips Time Value of Money. Retrieved November 2, 2010 from Retrieved from http://autonomousblogger.wordpress.com/2010/01/15/time-value-of-money-finances-most-important-concept/ University of Phoenix, The Lawrence Sports Simulations, 2010 Retrieved November 2, 2010 https://ecampus.phoenix.edu/