Each business day, on average, a company writes checks totaling $13,700 to pay i

Question

Each business day, on average, a company writes checks totaling $13,700 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 $24,700. The cash from the payments is available to the firm after two days.

Calculate the company

Each business day, on average, a company writes checks totaling $13,700 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 $24,700. The cash from the payments is available to the firm after two days.

Explanation / Answer

a> Disbursement Float=4*13700 54800 Collection Float=24700*(4/2) 49400 Net Float=49400-54800 -5400 b> Disbursement Float=4*13700 54800 Collection Float=24700*(4/1) 98800 Net Float=98800-54800 44000

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