Question1: Evaluate Lawrence Sports’ use of cash budgeting to the purpose of cash budgeting. Explain the weaknesses in Lawrence Sports’ existing working capital policies that lead to their cash flow problem.
Question2: The policy must cover the following:
[A] Supplier negotiation plan for terms of payment that balances the costs to Lawrence Sports & their cash requirements.
[B] Short term financing plan to ensure availability of an adequate line of credit while minimizing the cost of that credit.
[C] Metrics that will be used to monitor performance against the policy.
[D] Cash balance requirements including cash reserves needed for long term opportunities that may come up.
[E] Credit policy that balances Lawrence Sports desire to minimize accounts receivable and maximize revenue.