UofP - MBA550 - Individual Assignment - Paper - 04-29-06

UofP - MBA550 - Individual Assignment - Paper - 04-29-06 -...

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Situation Analysis 1 Situation Analysis and Problem Statement: Lawrence Sports Robert Sikes MBA550 Dr. June Maul April 29, 2006
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Situation Analysis 2 Situation Analysis and Problem Statement: Lawrence Sports This paper will illustrate the overall situation with Lawrence Sports identifying challenges and opportunities. It will further describe key stakeholders, the desired end state, goals, and develop a problem statement. Situation Background Lawrence Sports is a $20 million revenue company that manufacturers and distributes various sporting goods equipment. Presently, Lawrence Sports’ business partners include Mayo Stores, Gartner Products, and Murray Leather Works. Mayo Stores—Lawrence Sports’ principal customer—contributes 95 percent of its sales and is a retail leader in the United States with global expansion efforts underway (University, 2006). Gartner Products and Murray Leather Works provide raw and finished materials to Lawrence Sports and depend on timely payments in order to sustain financial health. However, Mayo Stores has defaulted on its payments, which has caused Lawrence Sports to draw from its line of credit account in order to meet financial obligations to Gartner Products and Murray Leather Works. In the interim, Lawrence Sports has hired a finance manager who must assess and analyze the current situation and, subsequently, propose a new financial strategy to the Chief Financial Officer (University, 2006). Issue Identification Lawrence Sports is confronted with handling day-to-day cash—collections, bad debts, disbursements, future revenues, borrowing, and loan repayments—as well as other challenges and inherent in positioning the company for growth sustainability including—but not limited to: Short-term financial solutions. Limited customer base. Working capital management. Stakeholder value opposition.
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Situation Analysis 3 As organizational change can be difficult, financial ratio analysis and alternative capital management strategies can be the first-steps toward Lawrence Sports identifying opportunities and potential solutions. Opportunity Identification Liquidity Ratios Liquidity ratios are helpful for short-term creditors/suppliers and bankers; however, they are also important to financial managers who must meet obligations to suppliers of credit. Furthermore, a complete liquidity ratio analysis can help uncover weaknesses in the financial position of Lawrence Sports (Brealey, 2005). Among the many ratios available for analysis, Lawrence Sports would discover the best “opportunity” ratios from (1) basic defense interval, (2) receivables turnover, (3) average collection period, and (4) inventory turnover. Basic defense interval ratio
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This note was uploaded on 09/18/2011 for the course MBA 550 taught by Professor Whoknows during the Spring '08 term at University of Phoenix.

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UofP - MBA550 - Individual Assignment - Paper - 04-29-06 -...

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