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Analysis of cash flow requires the basic understanding of how activities within a business cycle impact each other. For example, reduction of long term liabilities is caused by an outflow of current assets. Growth in accounts receivables increase net working capital and increase also accounts payables by the purchase of materials to fill customer orders. Bank loans provide cash inflows, but also increase costs by incurring interest expense.

Tracing the changes in cash or the interaction between inflows and outflows can divulge not only the liquidity and solvency of a corporation, but also can give valuable clues as to what facets of the business an organization deems as most important to established goals and policies, what levels of risk are considered acceptable and whether business decisions tend to favor liberal or conservative choices.

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While short term cash flow statements are connected to the long range health of a corporation, extended periods of negative cash flows have serious implications for a company to be able to continue operations, and therefore, require regular monitoring and immediate problem resolutions.

The cash flow problem faced by Lawrence Sports, the course scenario company, has not yet endangered the firm’s productivity level, but is a serious sign that requires close monitoring and best-practice solutions in order that the defaulting company’s problem is properly assessed, that the short term solutions that are being considered will be sufficient to prevent future recurrence, and that positive cash flows can be re-established.

Adding to Lawrence’s concerns are the facts that the defaulting company has been a principal customer, contributing the greatest inflow of cash to Lawrence’s operating revenue….that a bank loan and deferred payable account have already been used to address one week of the negative cash flow…. and that future customer relations could be jeopardized by relying upon harsh actions that might force earlier payment. F) Identify best practices in working capital management in a given industry G) Evaluate the risks and opportunities of working capital strategies Analyze the Ethical Implications of Competing Working Capital Alternatives

When obtaining finances for working capital, ethical decisions for an organization have to be made regarding how funding is received for a company as well as how to repay that loan or funding. Many options for receiving working capital exists but how its obtained can become an ethical issue. Since mostly anyone qualifies for this type of advance, it is beneficial for a company such as Lawrence Sports and its potential process, in growing. Going this route will help keep the company current and competitive in the market since this type of funding is used typically for marketing, payroll, and even handling company debt amongst other things.

Ethics generally comes to play in obtaining these finances because access could determine a business’s failure or success, literally. J) Editing Benchmarked Companies Hope Bradley – United Parcel Service (UPS) Over the past 100 years, UPS has become an expert in transformation, growing from a small messenger company to a leading provider of air, ocean, ground, and electronic services. Founded in 1907 as a messenger company in the United States, UPS has grown into a $42. 6 billion corporation by clearly focusing on the goal of enabling commerce around the globe.

It is a company that has never shied away from reinventing itself with new ideas with its main focus being on customer service. Executives and top management at UPS focus on goals that consist of how to grow business by reaching new markets, how to improve their cash position, how to differentiate products, how to improve customer service, and how to enhance productivity. Much like the scenario, executive management has found ways to establish acquisition amongst the markets that allows the company itself to remain ahead in the market and one of the “top dogs” in its industry.

Although the core of the business remained the distribution of goods and the information that accompanies them, UPS had begun to branch out and focus on a new channel, services. As UPS management saw it, the company’s expertise in shipping and tracking positioned it to become an enabler of global commerce, and a facilitator of the three flows that make up commerce: goods, information, and capital. To fulfill this vision of new service offerings, UPS began strategically acquiring existing companies and creating new kinds of companies that didn’t previously exist.

UPS has been able to succeed in accomplishing the best practices beyond the industry they have been involved in because of the tactics used by management to involve the spread of powers. Two necessary acquisition moves the company made to keep up with competition was the buy out of Overnight, another competitive transportation company, and the development of the UPS Store. The UPS store can often be compared to the FedEx Kinko’s establishment. With such a huge volume even today, UPS has had to develop even more innovative technology to maintain efficiency, keep prices competitive, and provide new customer services.

The new technology used at UPS spans an incredible range, from small handheld devices, to specially designed package delivery vehicles, to global computer and communications systems. Within recent years, UPS has even been able to adopt the acronym UPS which is an indicator that it has the capability of a broad expanse of services. Through these acquisitions and creations, UPS sought to serve its customers in a new way. By providing unique supply-chain solutions, UPS allowed its customers to better serve their own customers, and focus on core skills.

From this, UPS formed UPS Logistics Group to provide global supply chain management solutions and consulting services based on customersi?? individual needs. Over time, UPS has become a leader in global supply chain management. At UPS, global distribution and logistics involves managing not only the movement of goods, but also the information and funds that move with those goods. In recent years, UPS net profit took a decrease of 13. 5% for the first time since 2003. This was due to weak domestic market. However, UPS decided to concentrate on its international market to balance things out.

“Strong growth in our international package and supply chain and freight business helped offset the impact of a slowing U. S economy. We will continue to invest aggressively to seize the growth opportunities created by the rise in global trade,” (Page, 2007, p. 1). Due to UPS’s strive for excellence in every aspect of maintaining its business; they have managed to become successful in all their acquired services. Furthermore, the company has maintained to be true to its origins in maintaining its integrity, reliability, employee ownership and empowerment, and to customer service. Hope Bradley – Federal Express (FedEx)

Federal Express is an express transportation company founded in 1973 by Fredrick W. Smith. Federal Express is said to have become so successful so quickly because all their competition became weaker at the same time. FedEx’s main focus is to bring returns to stockholders which consist of a great amount of employees. They also have focuses on emphasizing adding value above and beyond just their service of transporting an object from one place to another and a focus of operations in logistics, transportation, and related information. Information about the package is as important as the package itself.

I said that in 1978, five years after FedEx created the modern express industry. Please don’t misunderstand me. We care a lot about what’s inside the box, but the ability to track and trace shipments and thereby manage inventory in motion revolutionized logistics, (Smith, 2007, p. 64). FedEx’s management’s mission is focused to keep them from diversifying, yet vague enough for the purpose to leave room for growth in all those areas. Like the scenario in the Lawrence Sports example, FedEx merged with Kinko’s in order to maintain a sense of seniority within the packaging industry.

This merge and move made the company stronger in ways that provided more options to consumers by being able to do more jobs than just transportation. Management at FedEx expressed that its goals are to manage collaboratively and collectively and are committed as a team and that their senior leaders are in it for the long haul. Federal Express has five strategies that govern business tactics. These are to improve service levels, lower unit costs, establish international leadership and sustain profitability, get closer to the customer, and maintain the People-Service-Profit Philosophy.

Management also placed an emphasis on five focus areas which are having the FedEx outstanding experience, improving service reliability, managing domestic business for revenue and yield, reducing structural costs, and extending global reach. Federal Express operates on a global scale in which they provide services that appeal to most of the world. In result of this, FedEx uses and continues to search for new technology. They allow spending of $1billion a year, for information technology. That commitment keeps customers from switching to other providers, proving that FedEx has excellent global communication with their customers.

Federal Express, in its years of operation, has experienced company weaknesses and resource deficiencies. (Harris, date unknown) Some are its rising prices which are now above their competitors’. They have also had issues with labor disputes with pilots. An organization was formed where there were demands in the changes in pilots’ salaries, retirement benefits, and the fact that FedEx outsources some foreign flights instead of giving their own pilots the job. Due to this, FedEx and its pilots have developed a tentative agreement. FedEx has opportunities for improvement.

FedEx has the desire to continue to expand globally. The company has continued to expand into new technologies or areas within their industry. In conclusion, Federal Express operates on a global scale and operates in 211 countries providing services that appeal to most of the world. They have such a large market in which to operate, and thus realize tremendous revenues. The constant expenditure on new technology shows that they are committed to their customers. Because of this, FedEx customers are assured that they will always be on top of technology.

They are determined to incorporating smaller companies with similar operations under its belt to synergize and control more of the market. Management at FedEx expressed that its goals are to manage collaboratively and collectively and are committed as a team in order for the company to reach its potential to remain one of the leading transportation companies in the world. Travis Kinney – Ford Motor Company Ford Motor Company was founded by Henry Ford and was incorporated on June 16, 1903. However, their long history is not a guarantee for future success. According to Edmunds.com Ford “lost $1. 6 billion in all of 2005″(Edmunds. com). Making it even worse for Ford is the current sinking economy and a huge spike in gas prices during 2008 that has scared many people away from buying the gas guzzling American cars and trucks that the Ford Lineup offers. A company must eventually earn profits in order to stay in business. Ford, GM, and Chrysler have all recently run into cash shortfalls. While the latter two companies have required money from the government to stay afloat while they modify their operations Ford has been able to survive on its own cash so far.

They have taken measures to increase the amount of days of accounts payable they have. By extending the amount of days payable they have from 32 to 35 (Ioma’s Report) they are in effect raising the amount of cash they have on hand. There are negative consequences for this however, “some companies are reluctant to stretch payments because they are concerned about how it will look on their financial statements. They do not want potential investors, and perhaps their bankers, thinking that they cannot pay their bills” (Ioma’s Report).

Vendors may also not be happy with the later payments as it affects their cash flow also. However, the vendors that Ford is paying late have a huge interest in helping Ford. If Ford goes out of business they will no longer receive the business that they gain from Ford. It is possible that some vendors will no longer want to work with Ford and may have other options or contracts with other car manufacturers that will keep them afloat. This is something that Ford had to consider before making this change. Travis Kinney – Jon Barrett – Jon Barrett – Procter ; Gamble

Procter ; Gamble is a company provided health, beauty and household care products with a global reach of more than 280 countries. P;G’s 2008 SEC filing show the company making $5 billion with $1. 58 per share, for the quarter compared to $3. 27 billion or 98 cents a share the previous year. CEO, Alan Lafley, was trying to increase market share by promoting coupons and expressing value to customers on a budget. According t the Form 10Q, cash generated from operating activities for the fiscal year to date period was $5. 6 billion, a decrease of 20% compared to the prior year.

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