Question

ABC Company writes 338 checks a day for an average amount of $428 each. These checks generally clear the bank in 5 days. In addition, the firm generally receives an average of $134314 a day in checks that are deposited immediately. Deposited funds are available in 1 days. What is the firm's net float?

Answer 1

Solution:
	Firm's net disbursement float is	$589,006.00
Working Notes:
	Net Float = Disbursement Float - Collection Float
	Disbursement Float = number of checks written x check amount x number of days to clear the checks
	Disbursement Float = 338 x 428 x 5
	Disbursement Float = 723,320
	Collection Flat = checks amount collected x number of days to clear the checks
	Collection Flat = $134,314 x 1
	Collection Flat = $134,314
	Net Float = Disbursement Float - Collection Float
	Net Float = 723,320 - 134,314
	Net Float = 589,006
	Net disbursement float = $589,006.00	as disbursement is higher
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