Exam 27: Cash Management

Rubber Tires receives three checks a month.The first check averages $842,000 and clears in 1.2 days.The second check averages $318,000 and clears in .7 days.The third check averages $465,000 and clears in 2 days.What is the average daily float? Assume a 30-day month.

An appropriate cash balance is reached when the:

Financial managers frequently broaden their definition of cash to include:

Uptown Bank provides lockbox services.They estimate that you can reduce your average mail time by 2.2 days and your combined clearing and processing time by .75 days by implementing their system.Your firm receives 65 checks a day with an average value of $298 each.The current T-Bill rate is .01 percent per day.Assume a 365-day year.The bank will charge your firm $.15 per check.What is the annual net savings from installing this system?

Firms would need to hold zero cash for transaction purposes if all outgoing cash transactions could be:

This morning,Wilson's Meats had both a book and a bank balance of $1,500.Today,the firm received 20 checks from customers that averaged $110 each.The funds from these checks will be delayed by one day,which will cover both the processing and availability delays.Wilson's also received $4,000 of payments from customers who are billed and pay electronically.The electronic payments are available immediately.What is the firm's collection float as of the end of this day?

The cost of holding cash:

Which one of the following related to float management is true?

Mail float

UpTown Beverages has a checkbook balance of $132,462.However,when the financial manager looks up the firm's account on the bank's website,the balance that appears is $147,918.What is the net float? Is the net float a collection float or a disbursement float?

Solid Financial provides lockbox services.They estimate that your firm can reduce its average collection mail time by 1.6 days and the clearing and processing time by 1.2 days by implementing their system.Your firm receives 74 checks a day with an average value of $9,750 each.The current T-Bill rate is .014 percent per day.Assume a 365-day year.What is the net amount of annual income your firm can earn if it installs this service at an annual cost of $48,000?

Which one of the following is the best means of managing disbursements from an ethical,business,and economic point of view?

Explain why money market preferred stock appeals to corporations.

Money market securities are best defined as securities:

Collection float increases:

Net collection float means the:

Money market preferred stock offers competitive rates of return similar to traditional money-market instruments but:

Sports 'n More receives five checks per month.These checks average $811,$416,$6,420,$22,900,and $8,700.The three larger sized check amounts are available after 1.5 days while the two smaller check amounts are available after one day.What is the weighted average delay?

Atlas receives four checks per month.The amounts of the checks and their respective processing and availability delays are as follows: What is the weighted average delay?

Most large firms hold a larger cash balance than most models imply because: