Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Sheila's Society Clothing Manufacturer has collection centres around the country to speed up cash collections. The company also makes its disbursements from remote disbursement centres,

Sheila's Society Clothing Manufacturer has collection centres around the country to speed up cash collections. The company also makes its disbursements from remote disbursement centres, so cheques written by Sheila's take longer to clear the bank. Collection time has been reduced by three days and a half days and disbursement time has been increased by two days because of these policies. Excess funds are being invested in short-term instruments yielding 4 percent per annum.
a. If the firm has $4.50 million per day in collections and $3.50 million per day in disbursements, how many dollars has the cash management system freed up?(Enter the answer in dollars not in millions.)
Freed-up funds
$
b. How much can Sheila's earn per year on short-term investments made possible by the freed-up cash? (Enter the answer in dollars not in millions.)
Interest on freed-up cash
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

An Introduction To Socio-Finance

Authors: Jørgen Vitting Andersen, Andrzej Nowak

2013th Edition

3642419437, 978-3642419430

More Books

Students also viewed these Finance questions

Question

What defines the bargaining zone in distributive bargaining?

Answered: 1 week ago