Practice Test Geeks(CCM) Certified Credit Manager Practice Test
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Data Analysis & Decision Making Flashcards

7 cards from real CCM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Data Analysis & Decision Making flashcards as text

  1. A credit manager notices that a customer's Days Sales Outstanding (DSO) has increased from 35 to 62 days over six months. What is the most appropriate initial action?

    Answer: Investigate whether the increase reflects an industry-wide trend or is customer-specific

    Benchmarking the DSO change against industry peers determines whether the risk is systemic or isolated before taking action.

  2. Which statistical measure best describes the spread of credit scores across a customer portfolio?

    Answer: Standard deviation

    Standard deviation quantifies how widely individual credit scores deviate from the portfolio average.

  3. A regression analysis of payment behavior shows an R² of 0.85. What does this indicate?

    Answer: 85% of payment behavior variance is explained by the model's independent variables

    R² (coefficient of determination) measures the proportion of variance in the dependent variable explained by the independent variables.

  4. When building a credit scorecard, which technique is used to assign weights to predictor variables based on their predictive power?

    Answer: Weight of Evidence (WoE) analysis

    Weight of Evidence quantifies the predictive power of each variable bin and is the foundation for scorecard development.

  5. A credit analyst is evaluating two suppliers. Supplier A has a Gini coefficient of 0.72 and Supplier B has 0.45. Which supplier's payment model discriminates better between good and bad payers?

    Answer: Supplier A, because a higher Gini coefficient indicates better model discrimination

    A higher Gini coefficient (closer to 1) indicates superior discriminatory power in separating good from bad credit risks.

  6. Which data visualization type is most effective for identifying outliers in accounts receivable aging data?

    Answer: Box plot

    Box plots display the interquartile range and flag outliers as points beyond the whiskers, making them ideal for detecting anomalies.

  7. A company's bad debt expense as a percentage of credit sales has risen from 1.2% to 2.8% over two quarters. What type of analysis should the credit manager perform first?

    Answer: Vintage analysis to identify which credit approval cohorts are underperforming

    Vintage analysis groups accounts by origination period to pinpoint which cohorts of approvals are driving the increase in bad debt.