Each business day, on average, a company writes check totaling $38,500 to pay its suppliers. The usual clearing time for the checks is five days. Meanwhile, the company is receiving payments from its customers each day, in the form of checks, totaling $49,500. The cash from the payments is available to the firm after three days. a. Calculate the company's disbursement float, collection float, and net float. Disbursement float _____________ Collection float ________ Net float ___________ b. Calculate the company's disbursement float, collection float, and net float, if the collected funds were available in one day instead of three. Disbursement float _________ Collection float _____________ Net float _____________
Each business day, on average, a company writes check totaling $38,500 to pay its suppliers. The usual clearing time for the checks is five days. Meanwhile, the company is receiving payments from its customers each day, in the form of checks, totaling $49,500. The cash from the payments is available to the firm after three days.
a. Calculate the company's disbursement float, collection float, and net float.
Disbursement float _____________
Collection float ________
Net float ___________
b. Calculate the company's disbursement float, collection float, and net float, if the collected funds were available in one day instead of three.
Disbursement float _________
Collection float _____________
Net float _____________
The float discuss about the money within the banking system. Due to time gaps in registering a deposit or withdrawal, the money get counted twice.
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