PCM PCM Financial Management & Reporting

Question 1

Which financial metric measures the percentage of total outstanding debt that a collection agency successfully recovers within a given period?

Accepted Answer

Recovery rate

Answer

Charge-off rate

Answer

Net present value

Answer

Debt-to-equity ratio

Question 2

A collection manager reviewing the agency's P&L statement notices that cost per collected dollar has increased by 15% quarter-over-quarter. What is the MOST likely first step?

Accepted Answer

Analyze operational expense line items to identify cost drivers

Answer

Increase collector headcount immediately

Answer

Raise client fees to offset costs

Answer

Reduce technology investments

Question 3

Which budgeting approach requires each department to justify all expenditures from scratch each budget cycle rather than basing the new budget on prior-year figures?

Accepted Answer

Zero-based budgeting

Answer

Incremental budgeting

Answer

Activity-based budgeting

Answer

Rolling forecast budgeting

Question 4

A collection agency's Days Sales Outstanding (DSO) increased from 45 to 62 days. What does this indicate?

Accepted Answer

Clients are paying invoices more slowly or the collection cycle has lengthened

Answer

The agency is collecting receivables faster

Answer

Operating costs have decreased

Answer

The agency's portfolio size has shrunk

Question 5

In collection agency financial reporting, which statement shows the agency's cash inflows from collections, operating expenses paid, and net cash position over a period?

Accepted Answer

Cash flow statement

Answer

Balance sheet

Answer

Income statement

Answer

Statement of retained earnings

Question 6

A collection manager must present variance analysis to senior leadership. A favorable variance on collector commissions means:

Accepted Answer

Commissions paid were lower than budgeted

Answer

Commissions paid were higher than budgeted

Answer

Commission rates were increased

Answer

Collectors exceeded their performance targets