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Running head: WORKING CAPITAL POLICY Working bully Policy - Lawrence Sports Simulation In the Lawrence Sports scenario, the company faces several bulge outs. However, the main issue is managing its working capital. The appointed finance manager of LS must counterbalance collections, debts, revenues, and disbursements through fluctuations. Many opportunities present themselves that will be unspoilt to LS and their business partners. The incorrect decision could cause dilemmas that could be prejudicial to their business relationships and eventually the organization. A company has to have alternating(a) working capital policies that will reduce or justify future difficulties. Addressed in this document are the risk, recommendation, chance operations, and performance measures of the alternatives Lawrence should use to alleviate issues. Lawrence Sports has a bank argumentation of credit, which allows them to maintain a cash balance of $50,000. However, interest night club range from 10% to 16% and limit borrowing to $1.2 million. A first alternative is to reduce interest rates via short-run financing. This is beneficial as an emergency fund, is less costly, and raises profitability. Firms typically exercise short-term loans to finance seasonal or temporary call for (Emery, 2007, p 648).

Short-term loans usually span a course or less and provide the ability to collect on receivables to generate cash and meet debt obligations. mayo currently has an 80% default rate, which in turn forces Lawrence Sports to defer their conciliatement to Gartner. A second alternative is to offer trade credit to Mayo as a cash discount incentive to pay quickly. Trade credit is the largest single source of short-term finances for businesses, representing approximately one-third of the current liabilities of nonfinancial firms (Emery, 2007, p 648). pass a cash discount provides an important source of funds. Lawrence Sports endure offer Mayo a 2% discount for invoices pay within 10... If you want to get a full essay, order it on our website: Orderessay

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