CM333

Course ro[ecL Case 32

LxecuLlve Summarv
1he purpose of Lhls analvsls ls Lo asslsL Lhe Culck SLab CollecLlon Aaencv (CSCA) ln deLermlnlna lf Lhe
amounL or slze of a blll collecLlon ls dlrecLlv relaLed Lo Lhe number of davs Lhe blll ls laLe ln order Lo
supporL Lhe valldlLv of Lhls relaLlonshlp a sLaLlsLlcal analvsls on Lhe daLa provlded wlll supporL Lhe
relaLlonshlp wlLh 93 confldence 1hese flndlnas wlll alve us a beLLer undersLandlna of Lhe CSCA's
buslness and provlde kev lnslahLs on Lhe relaLlonshlps beLween Lhe daLa belna evaluaLed
lnLroducLlon
ueLermlnlna wheLher Lhe amounL of a blll has an effecL on Lhe number of davs Lhe blll ls laLe ls Lhe kev
focal polnL of Lhls analvsls 1hls lnformaLlon wlll be valuable for Lhe buslness Lo develop efflclencv and
proflLablllLv wlLhln Lhe accounL servlces Leam ln addlLlon Lhe flnal ouLpuL of Lhe analvsls can be applled
Lo manv slLuaLlons such as lnslahLs lnLo cusLomer Lrends ln blll pavmenL flnanclna and Lhe currenL
economlc lmpacL on Lhe blll collecLlon buslness 1hls analvsls wlll help conflrm Lhe lmporLance of pavlna
a blll on Llme and should be supporLed bv Lhe cllenL servlces Leam ln Lhere manaaemenL of blll
acqulslLlons We are currenLlv faced wlLh a challenalna economv and our supporL of moLlvaLlna cllenLs Lo
expedlLe Lhelr blll pavmenLs wlll help our buslness and our cusLomer's personal and lnLernal flnances
1o valldaLe Lhe relaLlonshlp beLween Lhe amounL of a blll and Lhe number of davs laLe lL ls for boLh
commerclal and resldenLlal accounLs we applv a llnear rearesslon meLhod Lo aeneraLe an accuraLe
sLaLlsLlcal analvsls of Lhe daLa 8v uslna Lhls form of analvsls we wlll be able Lo answer Lhe followlna
quesLlons wlLh Lhe lnformaLlon provlded
* uoes Lhe slze of Lhe blll somehow relaLe Lo Lhe number of davs Lhe pavmenL ls laLe? lf so how?
* uoes Lhe model show Lhe correlaLlon beLween Lhe slze of Lhe blll and Lhe number of davs Lhe blll ls
laLe?
* uoes Lhe relaLlonshlp beLween davs laLe and Lhe amounL of Lhe blll dlffer beLween commerclal and
resldenLlal accounLs?

uaLa rovlded

roflLablllLv aL CSCA depends crlLlcallv on Lhe number of davs Lo collecL Lhe pavmenL and on Lhe slze of
Lhe blll as well as on Lhe dlscounL raLe offered A random sample of 96 accounLs closed ouL durlna Lhe
monLhs of !anuarv Lhrouah !une vlelded Lhe followlna

* 1he varlable of uA?S for each accounL equals Lhe number of davs Lo collecL Lhe pavmenL
* 1he varlable 8lLL for each accounLs equals Lhe amounL of Lhe overdue blll ln dollars
* 1?L 1 lndenLlfles resldenLlal accounLs and 1?L 0 ldenLlfles commerclal accounLs

8esulLs

* 8v conducLlna a descrlpLlve analvsls on Lhe daLa for boLh resldenLlal and commerclal accounLs we
flnd LhaL Lhe mean number for davs laLe for a blll ls approxlmaLelv 30 davs 1he mean for Lhe amounL of
bllls due ls approxlmaLelv $174 dollars
* lf we conducL a descrlpLlve bv cusLomer Lvpe we flnd LhaL
* 1he mean davs laLe for commerclal accounLs ls approxlmaLelv 68 dav
* 1he mean davs laLe for resldenLlal accounLs ls approxlmaLelv 31 davs
* 1he mean blll amounL for boLh commerclal and resldenLlal ls Lhe same
* 1hree rearesslon analvses were preformed for buslness accounLs resldenLlal accounLs and
comblned 1o vlsuallze Lhe daLa a scaLLerploL was produced Lo vlsuallze Lhe daLa lncluded ln Lhe
scaLLer ploL are Lhe calculaLed rearesslon equaLlons and Lhe rsquared values for each analvsls ls
dlsplaved see appendlx
* er Lhe LlahL llnear arouplna of daLa polnLs ln Lhe rearesslon analvsls we can deLermlne LhaL slze of
Lhe blll does relaLe Lo Lhe number of davs Lhe pavmenL ls laLe
* 1he relaLlonshlp ls poslLlve for resldenLlal accounLs meanlna a hlaher blll amounL has an assoclaLlon
wlLh a laraer number of davs overdue 1he llnear rearesslon model for Lhese accounLs ls v 3630 x
0740 (v) ls Lhe amounL of Lhe blll and (x) ls Lhe number of davs overdue 1hls means LhaL for everv 1
dav lncrease ln Lhe davs overdue Lhe amounL of Lhe assoclaLed blll lncreases bv $363
* 1he relaLlonshlp ls neaaLlve for commerclal accounLs meanlna a hlaher blll has an assoclaLlon wlLh a
lower number of davs overdue 1he llnear rearesslon model for Lhese cusLomers ls v 3009 x +
317274 (v) ls Lhe amounL of Lhe blll and (x) ls Lhe number of davs overdue 1hls means LhaL for everv 1
dav lncrease ln Lhe davs overdue Lhe amounL of Lhe assoclaLed blll decreases bv $301
* 1he correlaLlon ls verv sLrona for boLh accounLs (r2 0933 or 933 varlaLlon ls explalned ln Lhe
daLa for resldenLlal accounLs and r2 0937 or 937 varlaLlon ls explalned ln daLa for commerclal
accounLs)
* lor boLh klnds of accounLs bllls around $230 $300 have a Lendencv Lo be abouL 30 davs laLe
8esldenLlal accounLs LhaL have bllls less Lhan $230 Lend Lo pav before 30 davs Commerclal accounLs
wlLh bllls less Lhan $230 aenerallv pav afLer 30 davs

8ecommendaLlons

er Lhe daLa provlded ln Lhe rearesslon analvsls lL ls recommended LhaL manaaemenL lmprove Lralnlna
of accounL manaaers Lo moLlvaLe Lhelr cllenLs Lo pav Lhelr bllls ln Llme AccounL manaaers can offer Lhelr
cllenLs Lo Lake advanLaae of dlscounL raLes as an lncenLlve Lo expedlLe Lhelr pavmenLs lL ls
recommended LhaL we focus on commerclal accounLs slnce Lhere mav be more opporLunlLv Lo lncrease
Lhe slope on Lhe rearesslon llne for Lo close laLe pavmenLs on low blll amounLs uue Lo recenL economlc
Lrends lL mav be more dlfflculL Lo lmprove pavmenLs hlah balance resldenLlal accounLs 1houah lL ls sLlll
lmporLanL Lo promoLe dlscounL raLes Lo shorLen Lhe amounL of davs laLe for pavmenLs

1he accounL manaaemenL Leam should seL aoals Lo shorLen Lhe amounL of davs laLe for bllls on boLh
accounLs Lvpes 1hls wlll lmprove proflLablllLv for Lhe Culck SLab CollecLlon Aaencv
Concluslons and Summarv
1hrouah Lhls analvsls we have ldenLlfled a llnear relaLlonshlp beLween Lhe amounL of a blll and Lhe
amounL of davs LhaL Lhe blll ls overdue 1hls relaLlonshlp ls found boLh wlLhln resldenLlal accounLs and
buslness accounLs

8esldenLlal accounLs appear Lo have ouLsLandlna blll amounLs beLween $30 and $300 and
approxlmaLelv 0 Lo 30 davs laLe Plaher dellnquencv bllls were assoclaLed wlLh laraer accounL balances
due and Lhe less overdue bllls were assoclaLed wlLh smaller accounL balances due

Commerclal accounLs also seemed Lo have ouLsLandlna accounL balances beLween $30 and $300 buL
Lhelr accounLs had areaLer amounLs of Llme before pavmenLs beLween 40 and 100 davs laLe Cverdue
bllls seemed Lo be more assoclaLed wlLh smaller amounLs due and Lhe less overdue bllls were
assoclaLed wlLh laraer amounLs due 1hls ls lnLeresLlna slnce Lhe smallesL accounL of onlv $60 was 99
davs laLe 1hls seems Lo provlde an opporLunlLv for CSCA Lo decrease Lhe Llme of pavmenL for low
commerclal accounL balances

1hese resulLs are noL necessarllv evldence LhaL Lhe slze of a blll causes laLeness 1he analvsls ls [usL
showlna LhaL Lhere ls a relaLlonshlp beLween Lhe slze of a blll and Lhe number of davs overdue amona a
larae number of cusLomers 1here are several facLors LhaL mav aLLrlbuLe Lo Lhe laLe pavmenL of bllls and
furLher research should be conducLed Lo bulld off of Lhese flndlnas

8eferences

8ruce L 8owerman 8 1 (2004) LssenLlals of 8uslness SLaLlsLlcs new ?ork McCrawPlll Companles
lnc

varlables | | | | | |
uA?S Lhe number of davs Lo collecL Lhe pavmenL | | |
8lLL amounL of Lhe overdue blll | | | |
1?L 1 for resldenLlal accounLs 1?L 0 for commerclal accounLs |

Appendlx

uA?S | 8lLL | 1?L | uA?S | 8lLL | 1?L |
60 | 203 | 0 | 41 | 213 | 1 |
86 | 79 | 0 | 37 | 201 | 1 |
81 | 97 | 0 | 32 | 302 | 1 |
60 | 197 | 0 | 26 | 130 | 1 |
47 | 288 | 0 | 48 | 273 | 1 |
71 | 138 | 0 | 23 | 146 | 1 |
83 | 98 | 0 | 33 | 187 | 1 |
33 | 223 | 0 | 47 | 264 | 1 |
69 | 130 | 0 | 19 | 97 | 1 |
90 | 30 | 0 | 36 | 179 | 1 |
94 | 46 | 0 | 30 | 134 | 1 |
83 | 93 | 0 | 17 | 110 | 1 |
84 | 100 | 0 | 21 | 100 | 1 |
79 | 140 | 0 | 49 | 301 | 1 |
47 | 299 | 0 | 13 | 73 | 1 |
69 | 180 | 0 | 16 | 79 | 1 |
39 | 310 | 0 | 40 | 197 | 1 |
63 | 203 | 0 | 48 | 299 | 1 |
83 | 73 | 0 | 43 | 240 | 1 |
83 | 93 | 0 | 31 | 138 | 1 |
33 | 240 | 0 | 30 | 149 | 1 |
47 | 311 | 0 | 34 | 180 | 1 |
70 | 162 | 0 | 38 | 203 | 1 |
39 | 213 | 0 | 42 | 220 | 1 |
70 | 134 | 0 | 29 | 162 | 1 |
83 | 97 | 0 | 30 | 311 | 1 |
49 | 230 | 0 | 23 | 133 | 1 |
71 | 179 | 0 | 16 | 80 | 1 |
74 | 130 | 0 | 43 | 223 | 1 |
67 | 201 | 0 | 31 | 310 | 1 |
33 | 273 | 0 | 22 | 97 | 1 |
37 | 220 | 0 | 3 | 90 | 1 |
80 | 110 | 0 | 10 | 30 | 1 |
60 | 210 | 0 | 47 | 289 | 1 |
30 | 302 | 0 | 13 | 70 | 1 |
68 | 187 | 0 | 11 | 60 | 1 |
44 | 301 | 0 | 42 | 210 | 1 |
47 | 289 | 0 | 36 | 203 | 1 |
67 | 199 | 0 | 22 | 93 | 1 |
73 | 149 | 0 | 11 | 46 | 1 |
91 | 70 | 0 | 19 | 98 | 1 |
82 | 90 | 0 | 24 | 130 | 1 |
63 | 211 | 0 | 47 | 288 | 1 |
74 | 133 | 0 | 39 | 211 | 1 |
92 | 80 | 0 | 27 | 140 | 1 |
63 | 146 | 0 | 44 | 230 | 1 |
99 | 60 | 0 | 33 | 199 | 1 |
31 | 264 | 0 | 6 | 93 | 1 |
8earesslon Analvsls

8oLh AccounL 1vpes

uescrlpLlve sLaLlsLlcs | | |
| | |
| uA?S | |
counL | 96 | |
mean | 4978 | |
sample varlance | 33786 | |
sample sLandard devlaLlon | 2362 | |
SLem and Leaf ploL for | uA?S | |
sLem unlL | 10 | |
leaf unlL | 1 | |
| | |
lrequencv | SLem | Leaf |
2 | 0 | 3 6 |
10 | 1 | 0 1 1 3 3 6 6 7 9 9 |
9 | 2 | 1 2 2 4 3 3 6 7 9 |
12 | 3 | 0 0 1 3 4 3 6 6 7 8 9 9 |
19 | 4 | 0 1 2 2 3 3 4 4 7 7 7 7 7 7 7 8 8 9 9 |
10 | 3 | 0 0 1 1 2 3 3 3 7 9 |
11 | 6 | 0 0 0 3 3 3 7 7 8 9 9 |
8 | 7 | 0 0 1 1 3 4 4 9 |
10 | 8 | 0 1 2 3 3 3 3 4 3 6 |
3 | 9 | 0 1 2 4 9 |
0 | 10 | |
hlah ouLllers | 0 | |
96 | 0 | |
uescrlpLlve sLaLlsLlcs | | |
| | |
| 8lLL | |
counL | 96 | |
mean | 17427 | |
sample varlance | 603638 | |
sample sLandard devlaLlon | 7782 | |
SLem and Leaf ploL for | 8lLL | |
sLem unlL | 100 | |
leaf unlL | 10 | |
| | |
lrequencv | SLem | Leaf |
26 | 0 | 4 4 3 3 6 6 7 7 7 7 7 7 8 8 9 9 9 9 9 9 9 9 9 9 9 9 |
32 | 1 | 0 0 1 1 4 4 4 4 4 4 3 3 3 3 3 3 3 3 3 3 6 6 7 7 8 8 8 8 9 9 9 9 |
30 | 2 | 0 0 0 0 0 0 1 1 1 1 1 1 2 2 2 2 4 4 3 3 6 6 7 7 8 8 8 8 9 9|
8 | 3 | 0 0 0 0 1 1 1 1 |
0 | 4 | |
3rd quarLlle | 22123 | |
96 | 12330 | |
mode | 20300 | |
uescrlpLlve sLaLlsLlcs Commerclal |
| |
| uA?S |
counL | 48 |
mean | 6848 |
sample varlance | 23336 |
sample sLandard devlaLlon | 1328 |
mlnlmum | 39 |
maxlmum | 99 |
ranae | 60 |

uescrlpLlve sLaLlsLlcs 8esldenLlal |
| |
| uA?S |
counL | 48 |
mean | 3108 |
sample varlance | 18012 |
sample sLandard devlaLlon | 1342 |
mlnlmum | 3 |
maxlmum | 32 |
ranae | 47 |

uescrlpLlve sLaLlsLlcs Commerclal |
| |
| 8lLL |
counL | 48 |
mean | 17427 |
sample varlance | 612101 |
sample sLandard devlaLlon | 7824 |
mlnlmum | 46 |
maxlmum | 311 |
ranae | 263 |

uescrlpLlve sLaLlsLlcs 8esldenLlal |
| |
| 8lLL |
counL | 48 |
mean | 17427 |
sample varlance | 612101 |
sample sLandard devlaLlon | 7824 |
mlnlmum | 46 |
maxlmum | 311 |
ranae | 263 |