University of Phoenix MBA550: Working Capital Management Concepts Worksheet

Feb 3rd, 2012
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University of Phoenix
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Lawrence Sports (LS) currently finances all cash flow shortages with a $1.2 million line of credit from central bank. The credit line allows LS to maintain a positive cash balance of $50,000. LS source its materials from Gartner Products and Murray Leather Works.

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Working Capital Management Concepts WorksheetUniversity of PhoenixMBA550 week1WORKING CAPITAL MANAGEMENT CONCEPTS WORKSHEETConcept Application of Concept in the Simulation Reference to Concept in Reading Short-term financing "Lawrence Sports (LS) currently finances all cash flow shortages with a $1.2 million line of credit from central bank. The credit line allows LS to maintain a positive cash balance of $50,000. LS source its materials from Gartner Products and Murray Leather Works. The terms and credit with Gartner is 405 payment upon purchase and 60% in the following week. The terms with Murray are 15% payment upon purchase and 85% in the following week" (University of Phoenix, 2009). The financial manager specifies the forecaster cash requirements, interest rates, bank loans, accounts payables and credit limits. "The cumulative capital requirement can be met either from long-term or short-term financing. When long-term financing does not cover the cumulative capital requirement, the firm must raise short-term capital to make up the difference." (Brealey, Myers, Allen, 2005) Examine effects of accounts payable terms on cash conversion cycle and costs of goo

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