Working Capital Management Concepts Worksheet

ConceptApplication of Concept in the SimulationReference to Concept in ReadingShort-term financing?Whenever in that respect is a interchange deficit situation, gold lead be resumeed automatically from the bank to tide over it and to put forward a minimum cash balance of $50,000. The maximum reference point determine is $1.2 millions. At the end of each month, the lend go go forth be repaid automatically, after retaining $50,000? Options for Short-term financing: Bank loan: high-octane has an existing arrangement with its bank allowing it to borrow up to $38 million at an interest cost of 10 percent a year or 2.5 percent per quarter. The star sign tail borrow and repay whenever it fatalitys to as long as it does not exceed its consultation limit. Companies sometimes wait until they imply the money before they apply for a bank loan, further about three-quarters of commercial bank loans are made under(a) commitment. In this case the company establishes a line of cre dit that allows it to borrow from the bank up to an established limit. (Brealey, Myers, Allen, 2005)Credit Manager and works capital. ?Lawrence Sports is a $20 million revenue company that manufactures and distributes neat goods. Lawrence?s principal customer is mayonnaise, which is the world?s tether retailer. mayo is experiencing difficulties in repaying Lawrence, which is caused pressure from Lawrence? (University of Phoenix, 2009).

The credit manager of Lawrence Sports should narrow a short-term payment and collection arrangement purpose with mayonnaise to collect the debt from Mayo instead of pressuring them to pay as Mayo accounts for 95% of Lawrence Sports sales and losing them would mean that LS would go out of business.! This will also help LS with maintaining a reasonable cash pass and keeping them out of negative working capital.?The community?s Credit Manager sets the terms for payment, decides which customers should be offered credit, and... If you want to bunk a full essay, order it on our website: OrderEssay.net

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