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Working Capital Management Concepts Worksheet

Working Capital Management Concepts Worksheet

Working Capital Management Concepts Worksheet
|Concept |Application of Concept in the Simulation |Reference to Concept in Reading |
| | | |
|Terms of sale |Lawrence Sports need to set up a credit account with their primary customer, |“To encourage customers to pay before|
| |Mayo. However, Mayo has not been meeting their repayment due dates. |the final date, it is common to offer|
| |Lawrence may want to change their term of sale for future purchases. “ A |a cash discount for prompt |
| |seller may allow more extended payment if its customers are in a low-risk, if|settlement. You have decided on the |
| |their account is large, if they need time to check their quality of the |contract that customers must sign; |
| |goods, or if the goods are not quickly resold” (Brealey, & et al, p.819). |and you have established a procedure |
| | |for estimating the probability that |
| | |they will pay up” (Brealey, & et al, |
| | |p. 814). |
| | | |
|Cash flow |Cash flow is the total from cash receipts less any payments which was made |“You cannot pay bills with inventory |
|...