Float.pdf - Understanding Float \u2026 Float is defined as\"the difference between book cash and bank cash representing the net effect of checks in the

Float.pdf - Understanding Float u2026 Float is defined...

This preview shows page 1 - 2 out of 2 pages.

Understanding Float … Float is defined as "the difference between book cash and bank cash, representing the net effect of checks in the process of clearing." This is a very broad definition – as you will see, float has different meanings for different industries. The above definition about is probably the most common meaning of "float". Float = Firm’s Available Balance – Firm’s Book Balance Types of Float Disbursement Float is generated when a firm writes a check, causing a decrease in the firm’s book balance but to change in its available balance. Collection Float is created when a firm receives a check, causing an increase in the firm’s book balance but no change in its available balance. Items affecting float include mailing time, processing delay and availability delay. Measuring Float The size of the float is a function of both the amount of dollars and length of delay involved. A common measure of float is Average Daily Float and is calculated by multiplying the amount of
Image of page 1
Image of page 2

You've reached the end of your free preview.

Want to read both pages?

  • Winter '19
  • dr ayub
  • Economics, Float, Berkshire Hathaway, Warren Buffett, Electronic Data Interchange, Warren Buffet

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture