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Alternative Working Capital Approaches

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Create 3 alternate working capital policies and recommend one:

1) Conservative approach:

2) Agressive approach:

3) Maturity-matching approach

Need to describe each one and recommend the best one for Lawrence Sports.


Solution Preview

The purpose of working capital management is to assist companies in making realistic or sound financial decisions that will enable to: a. have the ability to have enough cash on hand/liquidity if needed. The company can go about doing this by investing in current assets so that if need be it will be able to have something to fall back on by liquidating those assets. This can be useful in the case of unexpected issues such as unforeseen demands. b. deciding what best way to invest its cash and gain the largest amount of profit possible. This can be done by investing the company's ...

Solution Summary

Working capital policies are very important to an organization's money management process. This solution discusses various working capital approaches and their implications.