Question
STATE FARM Company supplies components to auto repair shops. These shops send their checks via remittance firms. On the average, STATE FARM receives the checks
STATE FARM Company supplies components to auto repair shops. These shops send their checks via remittance firms. On the average, STATE FARM receives the checks 2 days after the shops mail them, it processes the checks for 2 days, and then subsequent deposited to its local bank, where it will clear after 24 hourS. The average daily collections: P40,000
REQUIRED: a. How much is the average daily collection float? b.If cash can be readily invested in instruments earning 5%, how much is the daily cost of the float? c. If STATE FARM can reduce the processing time of its checks by a day, and deposit it immediately, how much can it save in a year?
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