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Mba 550 Working Capital Management Worksheet

Working Capital Management Concepts Worksheet

Working Capital Management Concepts Worksheet
|Concept |Application of Concept in the Simulation |Reference to Concept in Reading |
|Cash Flow |In the simulation, Lawrence Sports needs to consider cash to pay bills not |“The company records a profit at the |
| |profit in order to continue to operate. Lawrence Sports should create and |time of sale, but there is no cash |
| |implement a new tough credit policy to allow optimization of working capital.|inflow until the bills are paid,” |
| |This will ensure that Lawrence Sports has a constant cash flow. |(Brealey, Myers, Allen, 2005, p.24). |
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|Credit Analysis |Lawrence Sports will run into financial trouble if their payment is stretched|“The simplest way to assess a |
| |beyond a certain limit. Ann Wu is the head of vendor relationships of |customer’s credit standing is to seek|
| |Lawrence Sports feels Murray Leather Works, business partner, is not doing a|the views of a specialist in credit |
| |good job in keeping Lawrence Sports in good financial standing. Therefore, |assessment,” (Brealey, Myers, Allen, |
| |the credit analysis of Lawrence Sports will not be optimal. |2005, p. 9). |
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