FIN 571 Week 3

Learning Team Assignment: Lawrence Sports Simulation

Create at least three alternative working capital policies that reduce future difficulties,

and make a recommendation on which policy Lawrence Sports should follow. Your

recommendation must include:

An evaluation of the risk associated with the recommendation

Contingencies for the recommendation

Performance measures that are used to evaluate your recommendation

An implementation plan for your recommendation

Write a paper in no more than 1,750 words discussing your recommendation. Your

paper must include a review of the cash conversion cycle for Lawrence Sports

Simulation and its importance to their working capital management. Develop and

explain your recommendation as fully as possible.

Format your paper consistent with APA guidelines.

Discussion Questions

Describe the cash conversion cycle and discuss its importance to working capital management.

What is a materials requirement planning (MRP) system and what are its implications in managing working capital in a manufacturing environment?

Why are interest rates on short-term loans not necessarily comparable to each other? Give three possible reasons.

How would rapidly expanding sales produce negative cash flow?

What effect does safety stock have on the carrying cost of inventory?

Optical Supply Company offers credit terms of 2/10, net 60. If Optical Supply is considering a change in its credit terms to one of those indicated, explain whether the change should increase or decrease sales. (a) 2/10, net 30, (b) net 60, (c) 3/15, net 60, (d) 2/10, net 30, 30 extra.