Each business day, on average, a company writes checks totaling $46,000 to pay its suppliers. The usual
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Each business day, on average, a company writes checks totaling $46,000 to pay its suppliers. The usual clearing time for the checks is four days. Meanwhile, the company is receiving payments from its customers each day, in the form of checks, totaling $71,000. The cash from the payments is available to the firm after two days.
a. Calculate the company’s disbursement float, collection float, and net float.
b. How would your answer to part (a) change if the collected funds were available in one day instead of two?
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a The disbursement float is the average monthly checks writte...View the full answer
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Related Book For
Essentials Of Corporate Finance
ISBN: 9780073405131
6th Edition
Authors: Stephen A. Ross, Randolph Westerfield, Bradford D. Jordan
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