For the problem, ou will be calculating net float so after completing the calculation, I also want us to discuss what exactly is float and how does this affect a corporations and operating and cash cycles?
Each business day, on average, a company writes checks totaling $32,000 to pay is suppliers. The usual clearing time for the checs is four days. Meanwhile , the company is recieving payments from its customers each day in the form o checks totalling $43,000. The cash from the payments is available to the fir after two days.
a. Calculate the company’s disbursement float, collection float, and net float.
b. How would your answer to part change if the collected funds were available in one day instead of two?