Question

ABC Company writes 23 checks a day for an average amount of $912 each. These checks...

ABC Company writes 23 checks a day for an average amount of $912 each. These checks generally clear the bank in 3days. In addition, the firm generally receives an average of $6327 a day in checks that are deposited immediately.Deposited funds are available in 2 days. What is the firm's net float?

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Answer #1
Formula to calculate net float
Net float = Collection Float - Disbursement float
Calculation of collection float
Collection float = Amount of check received*No of days funds are available
Collection float = 6,327*2
Collection float $12,654
Disbursement float = Amount of check deposited*No of days taken to clear
Disbursement float = (23*912)*3
Disbursement float $62,928
Net float = 12,654-62,928
Net float -$50,274
The firm's net float is -$50,274
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