OPPapers.com

Working Capital Management Concepts Worksheet

Working Capital Management Concepts Worksheet
University of Phoenix
MBA 550 WK1
September 29, 2008
Michael Taousakis
Working Capital Management Concepts Worksheet
|Concept |Application of Concept in the Simulation |Reference to Concept in Reading |
| |Lawrence Sports have set up a credit account, with their primary customer, |"To encourage customers to pay before|
| |Mayo. Currently, this is not a good situation, because Mayo has not been |the final date, it is common to offer|
|Term of Sale |making their repayment due dates. Lawrence Sports may need to change their |a cash discount for prompt |
| |term of sale in the future with this customer. |settlement. You have decided on the |
| | |contract that customers must sign; |
| |"A Seller may allow more extended payment if its customers are in a low-risk,|and you have established a procedure |
| |if their accounts are large, if they need time to check their quality of the |for estimating the probability that |
| |goods, or if the goods are not quickly resold" (Brealey, Myers, Allen, 2005).|they will pay up" (Brealey, Myers, |
| | |Allen, 2005). |
| |One form of financing used by Lawrence is a short-term option offered as a |"Short-term financial planning is |
|Short-term Financing |line of credit by Central Bank. When Lawrence Sports positive cash balance |concerned with the management of the |
| |falls below $50,000 the company automatically borrows from...