Lawerence_Sports

Lawrence Sport is to implement a major change in their organization, they will need strong leaders with experience, knowledge, someone who can initiate, and support change. The management team needs to have to ability to build relationships within the organization and promote positive interaction with employees to help make the team stronger to work toward the vision of Lawrence. Implementing a mentoring structure within the company will help new employees understand the importance of accomplishing the goals set in place by management and the organization. Mentoring is a positive aspect for the company, which provides the employees work opportunities while giving them a sense of belonging to an organization who cares. 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 can experience a profit increase under this policy. The purpose for the implementation approach is to receive payments in a timely manner. Using the short-term aggressive approach is ideal only if the firm expects decline in interest rates. The risks associated with this aggressive approach which, include higher interest rates, accounts receivable default, and credit limitations. Lawrence Sports will have to prepare to take action if needed in times of tight periods in the capital cash flow. Lawrence sports will need to remove the minimum positive cash flow and change its credit line to an aggressive option that uses less long-term and more short-term financing to raise profitability. Lawrence will need to be more aggressive at collecting accounts receivable from Mayo so that they can avoid stretching their payments to their sources Gartner Products and Murray Leather Works. Lawrence should use discounts of 2/10 net 30 as an incentive for Mayo to make its payments. This will smooth Lawrence's available cash flow during the week and will help Lawrence pay its sources of supply - Gartner Products and Murray Leather Works. The company will use the cash inflow and outflow ratio and the cash balance to measure the aggressive approach policy. Despite the high risk of the aggressive, short-term approach, contingencies will be in place to ensure that Lawrence Sports does not run into a situation of credit cut off or have higher interest rates affecting the cash flow. With a strong management as well as good customer relations, Lawrence Sports will be able to strengthen its cash conversion cycle and keep a $100,000 positive cash flow as the minimum required. Reference: Emery, D. R., Finnerty, J. D., & Stowe, J. D. (2007). Corporate Financial Management (3rd ed.). Morristown, NJ. Wohl Publishing Inc. Apollo Group, (2002). Working Capital Management Simulation. From https://ecampus.phoenix.edu/secure/AAPD/vendors/tata/sims/finance/working_capital/finance_working_capital_frame.html