Lawrence Sports: Working Capital Management

Sunflower Nutraceuticals is a privately owned company that is a wide distributor providing numerous dietary supplements for customers, distributors, and retailers (University of Phoenix, 2013). After starting the business in 2006 as an internet based company, SNC expanded operations into retail outlets as well as introducing some new private labeled products. Although SNC has the potential to grow into one of the major nutraceutical distributors in the industry, the company still struggles to break even. On more than one occasion SNC has been forced to exceed the company’s credit line of $1,000,000 to finance payroll and other

|Individual |Write a 700- to 1,050-word paper in which you do the following: |6/20/13 |9 |

The cash conversion cycle measures the time between a firm spending cash and collect cash from the sales. The longer the time period the greater the potential need for working capital to support the firm. Generally, lower cash conversion cycle times are seen as favorable. The cash conversion cycle starts with Lawrence Sports purchasing the inputs for the goods they make from Garner Products and Murray Leather Works. The purchases will be on credit, and payment will be due at a point in the future. The goods are then made and shipped to Mayo, the payments to Garner Products and Murray Leather Works are due before the payments are received from Mayo, with Mayo creating further delays.

Barnes plans to use the preceding ratios as the starting point for discussions with SKI 's operating executives. He wants everyone to think about the pros and cons of changing each type of current asset and how changes would inter-act to affect profits and EVA. Base on the data, does SKI seem to be following a relaxed, moderate, or restricted working capital policy?

John Stacey, a sales engineer for Aldhus Corporation, was worried. A flight delay had caused

The firm’s accounts receivable ratio increased from 68.71 in 2006 to 74.56 in 2010. This means that it is taking Abbott almost six days longer to collect from its customers today than it did five years ago. Furthermore, the firm’s accounts payable days has decreased from 43.72 in 2006 to 38.22 in 2010. This means that Abbott is paying its suppliers 5½ days earlier today than it did in 2006. A change in the inventory ratio from 8.01 in 2006 to 11.03 in 2010 indicates that it is taking the firm longer to sell finished goods than it used to. The increase in the accounts receivable and inventory ratios, combined with a decrease in the accounts payable ratio, indicates poor working capital management and helps to explain why the firm has increased its holdings of cash and short-term investments. To correct this, Abbott’s managers should focus on collecting cash from its customers faster and delaying payments to its suppliers. To maximize its cash position, the firm would be best served by paying its suppliers in the same amount of time as it collects payment from its customers.

Corporate Finance Notes * Chapter One: Introduce to Corporate Finance 1. Three Questions: A. What Long-term asset should be invested? Capital Budgeting B. How to raise cash for capital expenditures? Capital Structure C. How to manage short-term cash flow?

Humbro PLC have been successful with their Olympic themed board game, they have decided to take on a business venture of an expansion where they would be able to create a new product which can capitalise on the next football world cup. The finance director has been absent on a long term leave which has led to a lack of clarity and understanding of the various financial options among the other board members within the company. The managing director has asked for some financial advice and if this expansion will go ahead. In this report I will analyse Humbro PLCs financial information give my conclusion followed by my own recommendations for the company and if the expansion is to go ahead.

In case balance sheet items have an efficient management, this can reduce a firm’s NWC. By more collecting receivables in aggressive way, long-term financing method should not be a way that firm may rely on (which may be costly) to fund its operations. Ideally, the current liabilities should cover most of the financing for current assets, and the shareholders equity the rest, from a lenders point of view. (Strischek, 2001)

Recent changes in the business environments and economy have prompted Guillermo to find different options to invest and stay in business. As a new hire accountant for employer Guillermo Furniture, I have analyzed and differentiate capital budge techniques and recommended best suited course of action.

·         CEO has decided to use the capital committed to Bernoulli to boost the ailing performance of other parts of the firm.

Thank you for taking the time to work with us for financial advisement to increase your cash flows. If you are willing, I would like to address that even though your company sales are increasing, there is constant matter of not having enough cash to meet payroll or pay vendors within 30 days. We would like to give an overview of our services while giving you the suggestions on how speed up your operating cycle, along with looking at other accounts increase cash flows. Our proposal will outline how to solve your problems. Our design is based on years of experience, which will be tailored to your specific needs.

In this paper I’ll analyze the fundamental differences between the working capital structures and components for Google and Oracle, and speculate upon the main reasons why such differences exist; how each company could improve its working capital positions. As a Wall Street Analyst who has to recommend one of the companies as an investment to a company’s clients; based solely on that company’s working capital; as an Investment Banker who has to recommend loaning a substantial amount of capital to one company based solely on that company’s working capital.

Net present value (NPV), also called net present worth (NPW), is an approach to evaluating investments that assesses the difference between all the revenue the investment can be expected to achieve over its whole life and all the costs involved, taking inflation into consideration inflation and discounting both future costs and revenue at an appropriate rate. It can be challenging to calculate NPV because it is not always clear what discount rates should be used.

Working capital is a financial metric that represents the operational liquidity of a business (Working Capital Management Analysis, 2015). Along with fixed assets (property, plant, and equipment etc.) working capital is considered a part of operating capital. The more positive a company’s working capital is, the more they are required to certify that they are able to continue its processes and has sufficient funds to cover both, growing short-term debt and upcoming expenses. It is stated by Watson and Head (2013) that decisions relating to working capital and short term financing are referred to as working capital management, which involve managing the relationship between a firm 's short-term assets and its short-term liabilities. Morrison’s (Wm Morrison Supermarkets plc) was founded in 1899 and with a market share of 11% and listed on the London stock exchange - they have now become the fourth largest supermarket chain in the United Kingdom (Morrisons-corporate.com, 2015). Throughout this report, it is going to show Morrison’s calculated capital management to date, involving an evaluation of ratios and competitor ratios too.