A good cash management system

Reference no: EM1360116

A) A good cash management system would minimize disbursement float and maximize collections float.

B) If a firm begins to use a well designed lockbox system, this will reduce its customers' net float.

C) In the early 1980's, the prime interest rate hit a high of 21 percent. In 1995 the prime rate was considerably lower. That sharp interest rate decline has increased the firms' concerns about the efficiency of their cash management system.

D) If a firm can get its customers to permit it to pay by wire transfers rather than having to write checks, this will increase its net float and thus reduce its required cash balances.

E) A firm which has such a efficient cash management system that it has positive net float can have a negative checkbook balance at most times and still not have its checks bounce.

Reference no: EM1360116

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