On an average day, a company writes checks totaling $1,500. These checks take 7 days to clear. The company receives checks totaling $1,800. These checks take 4 days to clear. The cost of debt is 9%. What is the firm's collection float?

Question

Quizplus · Accepted Answer

Collection float is the amount of time between when a check is received and when the funds are available. Here, the firm receives $1,800 daily, and it takes 4 days to clear, so the collection float is $1,800 * 4 = $7,200. Since this is a positive float, the firm's collection float is -$7,200.

On an Average Day, a Company Writes Checks Totaling $1,500