Finance

6- Calculating Net Float. Each business day, on average, a company writes checks totaling $19,500 to pay its
suppliers. The usual clearing time for the checks is four days. Meanwhile, the company is receiving payments from
its customers each day, in the form of checks, totaling $37,200. The cash from the payments is available to the firm
after two days.

A) Calculate the company’s disbursement float, collection float, and net float.
B) How would your answer to part (a) change if the collected funds were available in one day instead of two?
7- Size of Accounts Receivable. Essence of Skunk Fragrances, Ltd., sells 6,500 units of its perfume collection each
year at a price per unit of $270. All sales are on credit with terms of 1/10, net 30. The discount is taken by 40
percent of the customers. What is the amount of the company’s accounts receivable? In reaction to sales by its main
competitor, Sewage Spray, Essence of Skunk is considering a change in its credit policy to terms of 3/10, net 30 to
preserve its market share. How will this change in policy affect accounts receivable.

14- EOQ. The Trektronics store begins each month with 740 phasers in stock. This stock is depleted each month and
reordered. If the carrying cost per phaser is $26 per year and the fixed order cost is $340, what is the total
carrying cost? What is the restocking cost? Should the company increase or decrease its order size? Describe an
optimal inventory policy for the company in terms of order size and order frequency.