Company disbursement float-collection float and net float

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Reference no: EM132266786

Each business day, on average, a company writes checks totaling $16,000 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 $21,000. The cash from the payments is available to the firm after two days.

a. Calculate the company’s disbursement float, collection float, and net float.

b. How would your answer to part (a) change if the collected funds were available in one day instead of two?

Reference no: EM132266786

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