Each business day, on average, a company writes checks totaling $34,500 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 $45,500. The cash from the payments is available to the firm after three days.
Each business day, on average, a company writes checks totaling $34,500 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 $45,500. The cash from the payments is available to the firm after three days.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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![**Business Cash Flow Calculation Exercise**
Each business day, on average, a company writes checks totaling $34,500 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 $45,500. The cash from the payments is available to the firm after three days.
**Tasks:**
a. Calculate the company’s disbursement float, collection float, and net float. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.)
b. Calculate the company's disbursement float, collection float, and net float, if the collected funds were available in two days instead of three. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.)
**Tables for Calculation:**
1. **Scenario A:**
- Disbursement Float: [ ]
- Collection Float: [ ]
- Net Float: [ ]
2. **Scenario B (if collected funds were available in two days):**
- Disbursement Float: [ ]
- Collection Float: [ ]
- Net Float: [ ]
These tables help organize and calculate the respective floats under different scenarios related to cash flow timings.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4fc0b6f3-0ff8-4194-9057-0e548ce4bf79%2F28671fcb-9b2e-4baa-8025-ac5d6ccb80d0%2Fz5xdg3a.jpeg&w=3840&q=75)
Transcribed Image Text:**Business Cash Flow Calculation Exercise**
Each business day, on average, a company writes checks totaling $34,500 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 $45,500. The cash from the payments is available to the firm after three days.
**Tasks:**
a. Calculate the company’s disbursement float, collection float, and net float. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.)
b. Calculate the company's disbursement float, collection float, and net float, if the collected funds were available in two days instead of three. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.)
**Tables for Calculation:**
1. **Scenario A:**
- Disbursement Float: [ ]
- Collection Float: [ ]
- Net Float: [ ]
2. **Scenario B (if collected funds were available in two days):**
- Disbursement Float: [ ]
- Collection Float: [ ]
- Net Float: [ ]
These tables help organize and calculate the respective floats under different scenarios related to cash flow timings.
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