Sheila's Society Clothing Manufacturer has collection centres around the country to speed up cash collections. The company
Question:
Sheila's Society Clothing Manufacturer has collection centres around the country to speed up cash collections. The company also makes its disbursements from remote disbursement centres, so cheques written by Sheila's take longer to clear the bank. Collection time has been reduced by two and one-half days and disbursement time has been increased by one and one-half days because of these policies. Excess funds are being invested in short-term instruments yielding 6 percent per annum.
a. If the firm has $4 million per day in collections and $3 million per day in disbursements, how many dollars has the cash management system freed up?
b. How much can Sheila's earn per year on short-term investments made possible by the freed-up cash?
Step by Step Answer:
a 4000000 daily collections 25 days speed up 10000000 additional ...View the full answer
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
Students also viewed these Business questions
-
City Farm Insurance has collection centers across the country to speed up collections. The company also makes its disbursements from remote disbursement centers. The collection time has been reduced...
-
Aurora Electrical Company of Yellowknife ships wind turbines throughout the country. Mr. Beam, the financial manager, has determined that through the establishment of local collection centres around...
-
Beth's Society Clothiers, Inc., has collection centers across the country to speed up collections. The company also makes payments from remote disbursement centers so the firm's checks will take...
-
5. Vehicle crumple zones are designed to absorb energy during an impact by deforming to reduce transfer of energy to occupants. How much kinetic energy, in Btu, must a crumple zone absorb to fully...
-
An article in the Economist notes that the government of Venezuela running a large budget deficit "caused the money supply almost to quadruple in two years and led to the world's highest inflation...
-
Refer to the financial statements of Campbell Soup Company in Appendix A. Required: a. Identify the cause of the $101.6 million increase in shareholders' equity for Year 11. b. Compute the average...
-
A schematic diagram of crystal growth by directional solidification is shown in Fig. 18.8. Analyze the various flow mechanisms and indicate how they affect the heat transfer, the movement of the...
-
Determine the missing amounts (in millions) for the condensed balance sheets shownbelow. Costco $ 20,682 11,490 (c) Target $ 44,106 (a) 13,712 Wal-Mart $ (b) 98,906 64,608 Assets Liabilities...
-
1. Corporate Finance deals with raising funds for Private Companies, Corporate entities and Governments. What are these funds not used for ? Explain
-
What are the risks associated with providing employees only positive feedback and providing limited feedback on areas of improvement?
-
Power Play Inc. has seen profits drop acutely because of the economic downturn. To enhance profitability and to preserve cash, Power Play is considering shortening its credit period and eliminating...
-
Why are cash flows of more interest than income to the treasury manager?
-
Here is a typical problem in clamping force analysis (Figure 29-A). A milling cutter is face milling the top surface of a 1500-lb casting. The cutting force is 1800 lb, and the thrust force is 900...
-
Suppose a client C repeatedly connects via TCP to a given port on a server S and that each time, it is C that initiates the close. (a) How many TCP connections per second can C make here before it...
-
Propose an extension to TCP by which one end of a connection can hand off its end to a third host; that is, if A were connected to B, and A handed off its connection to C, then afterwards, C would be...
-
Suppose you are designing a sliding window protocol for a 1-Mbps point-to-point link to the moon, which has a one-way latency of 1. 25 seconds. Assuming that each frame carries 1 kB of data, what is...
-
Different architectures have different conventions on bit order as well as byte orderwhether the least significant bit of a byte, for example, is bit 0 or bit 7. RFC 791 defines the standard network...
-
Is it possible for TCP Reno to reach a state with the congestion window size much larger than (e.g., twice as large as) RTT bandwidth? Is it likely?
-
Exercise B.8 describes data on ages of husbands and wives at the time of marriage. (a) Do you expect the correlation between the ages at marriage of husbands and wives to be positive, negative, or...
-
Anna, a high school counselor, devised a program that integrates classroom learning with vocational training to help adolescents at risk for school dropouts stay in school and transition to work...
-
Gulliver Travel Agencies thinks interest rates in Europe are low. The firm borrows euros at 9 percent for one year. During this time period the dollar falls 14 percent against the euro. What is the...
-
Talmud Book Company borrows $24,900 for 60 days at 12 percent interest. What is the dollar cost of theloan? Days loan is outstanding Dollar cost of loan = Amount borrowed x Interest rate x Day sin...
-
McGriff Dog Food Company normally takes 27 days to pay for average daily credit purchases of $9,530. Its average daily sales are $10,680, and it collects accounts in 32 days. a. What is its net...
-
First, technology has a major impact on talent shortage. With the increased use of AI, there are fewer data analysis jobs required, so technology can potentially replace some forms of supply chain...
-
Career pathing programs arm staff with skills and provides incentives of growth, challenge, and visibility. It presents the chance to change the way a technology team is perceived internally and...
-
In order to better understand what you are trying to communicate, does Christianity and the Way of Jesus fall under a honor society, justice society or both?
Study smarter with the SolutionInn App