Working Capital Policy: Strategies In Action
Working Capital Policy
Working capital practices include the management and delicate balance of accounts receivables, accounts payables, inventory levels, and cash flows. The working capital managers at Lawrence Sports find the corporation in an intricate position following defaults and delays on receivables from the Mayo Stores that have directly affected their working capital practices, namely debt payment. The result for such delinquent behavior on the part of the May stores: a corresponding cash flow deficit forced on Lawrence Sports which has forced the working capital managers to take out large bank loans with high interest payments, loans which they are sometimes not able to pay in a timely fashion. There are a number of opportunities available to Lawrence Sports that may aid in rectifying the current position the corporation exist; all of the potential opportunities rest with Lawrence Sports restructuring their working capital policy to best meet cash budgeting issues.
Working Capital Management
Working capital, in general terms, is a company's current assets minus their current liabilities; working capital managers are the individuals who identify strategies to maintain an appropriate balance between a company's assets and their short-term debts, finance mangers work to consider long-term debt options. If there are multiple strategies within an organization to maintain the appropriate balance between assets and liabilities there may sometimes be implications to those practices. A working capitals manger must identify where and when it is appropriate to set particular standards of payments and allowances for individual clients and when it is appropriate to schedule payments and debt releases. The bottom line is the most important factor of a manager's function, so they must take into consideration the wants of investors and whether or not they are being ethical in their actions.
Cash flow, current assets, current...
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