Answered: 3.a. What are the Keynes as a…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter23: Other Topics In Working Capital Management

Section: Chapter Questions

Problem 2P: Optimal Cash Transfer Barenbaum Industries projects that cash outlays of 4.5 million will occur...

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Analyzing Cash and Marketable Securities techniques through answering the following:

3.a. What are the Keynes as a reasons/motives for holding cash?

3.b. A company has daily cash receipts of $100,000. The treasurer of the company has investigated a lock box service whereby the bank that offers this service will reduce the company’s collection time by three days at a monthly fee of $1,500. If money market rates average 5% during the year, what is the additional annual income (loss) from using the lock box service?

3.c. What do you think is a collection float compared with deposit float?

3.d. What is the type of float that management should increase due to its positive impact in the cash balance of the company?

Definition Definition Financial market that deals in securities or assets that are short-term in nature. The money market is responsible for keeping up the liquidity of the businesses and the organizations. These securities are usually held for a period of 12 months or less and are issued by institutions that require cash or funds for their short-term cash flow requirements. The money market is regulated by the federal government.

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