Hello, this is Stephanie from IPasstheCMAExam.com. I’d like to go through the new CMA exam syllabus for Part 2, effective January 2015. If you have been studying for the exam before 2015 and would like to know what’s been changed, please check out this video for more information. For the rest of you, let’s move on to the major topics in Part 2. Major Topics in CMA Exam Part 2 Part 2 is all about financial analysis and decision making. There are six sections: financial statement analysis representing 25%, corporate finance at 20%, decision analysis at 20%, risk management at 10%, investment decisions at 15% and professional ethics at 10%. Financial Statement Analysis This is the biggest section representing 25% of Part 2. Major topics include financial ratios, performance utilizing multiple ratios, market value vs book value, profitability analysis, effects of changing prices and inflation, off-balance sheet financing, and special issues such as foreign currency fluctuations, fair value accounting, and US GAAP vs IFRS. The coverage is similar to Section A of Part 1 on financial accounting, but the focus is more on analysis and comparison using key financial data and ratios.
In other words, Section A part 1 is more on understanding past performance using financial statement, while Section A in Part 2 focuses on evaluating future prospect. CMA exam candidates should be very familiar with these ratios and tools. I suggest that you memorize the formulas of all key ratios. You will also need to know the applications, and understand how external investors use them to evaluate the company’s financial health. Corporate Finance Corporate finance is another important topic. Candidates are expected to know the types of risk including the key concept of risk and return, capital instruments for financing, initial and secondary public offerings, dividend policy, cost of capital, working capital management, raising capital, mergers and acquisitions and international finance. We should understand the short-term and long-term financial management, as well as the benefits and limitations of major financial instruments. Candidates are expected to see a mix of conceptual and computational questions. The variety of questions can be very broad, but the calculations are likely quite basic.
Decision Analysis In this section candidates are tested on how management accountants provide data and perform analysis for the decision-making process. Exam content includes relevant data concepts, cost volume profit analysis, marginal analysis, make vs buy decisions, income tax implication for operational decision analysis, and pricing methodologies. Risk management is also part of decision analysis but we will go through this topic in Section Risk Management This section covers the types of risk, including business, hazard, financial, operational and legal risks; risk mitigation, risk management, risk analysis and enterprise risk management also known as ERM. Organizational managers need to identify, assess and respond to risks in order for the organization to achieve its goal. In the CMA exam, we focus on the ERM model and you are most likely to get conceptual questions in this section. Investment Decisions This section covers how management accountants help make important decisions whether to proceed with an investment, or to choose between investment alternatives. Topics include cash flow estimates, discounted cash flow concepts, net present value, internal rate of return, discounted payback, as well as risk analysis and real options. F.
Professional Ethics The exam content is based on the IMA Statement of Ethical Standards, covering ethical considerations for management accounting professionals, and for the organization as a whole. The principles and standards are concise and easy to understand. You are expected to memorize the names of the 4 standards, and more importantly, to know how they are applied in real business situations. CMA Exam Part 2 Pass Rate The historical pass rate of Part 2 is around 42%. While it is higher than that in Part 1, it’s hard to pinpoint the reason.
But since more candidates seem to take Part 1 before Part 2, they are typically more prepared when they reach the second part of the exam. If you are committed to the exam, pick the right review course and study using an effective strategy, your chance of passing success is a lot higher. I hope this video gives you a better understanding of Part 2 of the CMA Exam. Please drop a note in the comment section if you have any questions, or subscribe to my Youtube channel for more information. Thank you for watching and see you in the next video.
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