Reference no: EM133072032

Question - Ray Smith, a retired librarian, recently opened a sportsman's shop called Smitty's Sports Paradise (SSP). Smith decided at age 62 that he wasn't quite ready to stay at home living the life of leisure. It had always been his dream to open an outdoor sportsman's shop, so his friends convinced him to go ahead. Because Smith's educational background was in literature and not in business, he hired you, a finance expert, to help him with the store's cash management. Smith is very eager to learn, so he asked you to develop a set of questions to help him understand cash management. Now answer the following questions:

You have been going through the store's checkbook and bank balances. In the process, you discovered that SSP, on average, writes checks in the amount of $10,000 each day and that it takes about five days for these checks to clear. Also, the firm receives checks in the amount of $10,000 daily, but loses four days while they are being deposited and cleared. What is the firm's disbursement float, collections float, and net float?