Each business day, on average, a company writes cheques totalling 125,000 to pay its suppliers. The usual

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Each business day, on average, a company writes cheques totalling

€125,000 to pay its suppliers. The usual clearing time for the cheques is 3 days. Meanwhile, the company is receiving payments from its customers each day, in the form of cheques, totalling €140,000. The cash from the payments is available to the firm after 4 days.

(a) Calculate the company’s disbursement float, collection float and net float.

(b) What would be company’s net float if the collected funds were available in 2 days instead of 4?

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Corporate Finance

ISBN: 9780077173630

3rd Edition

Authors: David Hillier, Stephen A. Ross, Randolph W. Westerfield, Bradford D. Jordan, Jeffrey F. Jaffe

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Question Posted: Feb 22, 2024 03:02 AM

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Each business day, on average, a company writes cheques totalling 125,000 to pay its suppliers. The usual

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Float Calculations for the Company a Disbursement Float Collection Float and Net Float Disbursement ...View the full answer

Corporate Finance

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