CAM Financial Management & Budgeting 5

Question 1

A Certified Account Manager must present a budget proposal to leadership. Which element is MOST critical to include for credibility?

Accepted Answer

Assumptions and data sources underlying each key projection

Answer

Documenting assumptions and sources allows stakeholders to evaluate and validate the logic behind projections.

Question 2

Which financial ratio measures how efficiently a company uses its assets to generate revenue?

Accepted Answer

Asset turnover ratio

Answer

Asset turnover = Revenue ÷ Total Assets, measuring how effectively assets are deployed to generate sales.

Question 3

An account manager finds that a project's actual labor costs are 20% over budget due to underestimated hours. This is an example of:

Accepted Answer

A quantity (efficiency) variance

Answer

A quantity variance arises when more resources (hours) are consumed than planned, regardless of the rate paid.

Question 4

When a client negotiates extended payment terms from Net 30 to Net 60, what is the primary financial implication for the account manager's company?

Accepted Answer

Increased Days Sales Outstanding and potential cash flow strain

Answer

Extending payment terms delays cash collection, increasing DSO and putting pressure on the seller's working capital.

Question 5

A client's budget uses a 10% discount rate to evaluate future cash flows. This discount rate primarily reflects:

Accepted Answer

The cost of capital and risk associated with the investment

Answer

The discount rate represents the required rate of return, incorporating the cost of capital and investment risk.

(CAM) Certified Account Manager Practice Test