Each business day, on average, a company writes checks totaling $23,400 to pay its suppliers. The usual

Question:

Each business day, on average, a company writes checks totaling $23,400 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 $38,100. 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?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Essentials of Corporate Finance

ISBN: 978-1259277214

9th edition

Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan

Question Posted: