On Average, a Firm Collects Checks Totaling $250,000 Per Day

question 97

True/False

On average, a firm collects checks totaling $250,000 per day.It takes the firm approximately 4 days from the day the checks were mailed until they result in usable cash for the firm.Assume that (1) a lockbox system could be employed which would reduce the cash conversion procedure to 2 1/2 days and (2) the firm could invest any additional cash generated at 6% after taxes.The lockbox system would be a good buy if it costs $25,000 annually.

---

Definitions:

Indemnified

Protected against loss, damage, or legal liability through a legal agreement or insurance.

Expenditures

Money spent or costs incurred in the course of conducting business or achieving a project.

Personal Funds

Money that belongs to an individual and is used for personal, as opposed to business or other external, purposes.

Maintain Secrets

The obligation or practice of keeping information, such as trade secrets or confidential company information, undisclosed.