What to Do After the Exam
For candidates who are curious about what they should do after the examination, there is just one answer: relax. Nothing is more important than to use this time to relax. This examination is not easy to prepare for or to attempt, thus, the candidates who have done so...
CMA Salary Trends in India and Asia
Reciprocity Between ICAI and IMA If a person is a member of the ICAI (Institute of Chartered Accountants of India), he or she can apply for the CMA (US) membership provided the person has a valid ICAI certificate. Visit the IMA page here. Conversely, if a person is a...
50 Tips to Crack the CMA (US) Examination
1. Understand the Examination To start off, do not panic. Having a clear understanding of what exactly needs to be done helps the candidate in focusing on creating achievable goals. If the candidate has direction, he or she will be able to attempt and pass the...
CMA (US) Examination Overview
This is intended to brief the candidate about the examination format, length, difficulty level, and the type of questions to expect on the day of the examination. Format The examination is completely computer-based and is conducted at several Prometric centres around...
CMA (US) Examination Details – Part 1
Part 1 of the CMA (US) examination consists of financial reporting, planning, performance, and internal control. A candidate may find this like an introduction to the FAR section, a bit like the AUD section with regards to internal control, and a detailed, in-depth...
Importance of CMA (US)
Certified Management Accountant (US) has special importance in India since it is a globally-recognised qualification. A Mutual Recognition Act (MRA) between the IMA in the USA and the ICWA in India has rendered it equivalent to the ICWA qualification in India,...
Eligibility for the CMA (US) Examination
A candidate has to meet certain requirements before he or she is eligible to appear for the examination. Education Requirements First and foremost, an undergraduate degree from an established university is a must for any candidate. A candidate must go through...
How to Apply for the CMA (US) Examination
Given below are the steps to apply for the CMA (US) examination: Pay IMA Membership Fees When the candidate has decided to take the examination, he or she may join the IMA as a professional member. If the candidate is a resident of USA or Canada and is below 33 years...
Part 2 of the CMA (US) examination consists of financial analysis and decision making. Part 2 is divided into six sections. The percentage in the brackets represent the weightage of that topic:
- Financial Statement Analysis (25%)
- Corporate Finance (20%)
- Decision Analysis (20%)
- Risk Management (10%)
- Investment Decisions (15%)
- Professional Ethics (10%)
A. Financial Statement Analysis
This is the largest section of Part 2 covering 25%. It consists of topics including financial ratios, market value v/s book value, profitability analysis, performance-utilising multiple ratios, changing prices and inflation and their effects on the business, foreign currency fluctuations, off-balance sheet financing, US GAAP v/s IFRS, and fair-value accounting.
The focus of this section is on analysis and comparison using financial data and ratios. Compared to Section A of Part 1, this section focuses on evaluation of future prospects instead of assessing past performance.
Candidate must be familiar with financial ratios and analytical tools. It is advised to memorise the formulas of all the ratios. Candidates must also need to know the applications of these ratios and understand how external investors make use of them to assess the financial health of the business.
B. Corporate Finance
Under the umbrella of corporate finance, candidates must be well-versed with the concept of risk and return, different types of risks, initial and secondary public offerings, raising capital, cost of capital, capital instruments for financing the business, working capital management, international finance, and mergers and acquisitions, among others. Furthermore, the candidates must be able to understand short-term and long-term financial management and must have the knowledge about the advantages and disadvantages of various financial instruments.
In this section, the questions are a mix of conceptual and computational. Although the questions are of a vast variety, the calculations required are quite basic.
C. Decision Analysis
This section pertains to how management accountants gather data and perform analysis for the financial decision-making process. Section C covers topics related to data concepts, make v/s buy decisions, cost-volume-profit analysis, marginal analysis, pricing methodologies, and implication of income tax for operational decision analysis.
Although risk management is a part of decision analysis, it is covered in a separate section altogether.
D. Risk Management
The risk management section covers the different types of risk, i.e. business risk, hazard risk, operational risk, financial risk, and legal risk. It also covers risk mitigation, risk analysis, risk management, and enterprise risk management (ERM). Risk management is done by organisational managers to identify, assess, and respond to risks so that the organisation may achieve its goal.
This section contains conceptual questions. Candidates may focus on the ERM model.
E. Investment Decisions
Section E includes topics such as cash flow estimation, concepts of discounted cash flow, internal rate of return, net present value, discounted payback, real options, and risk analysis. Management accountants aid the firm in making crucial investment decisions and choose between various investment alternatives.
F. Professional Ethics
The content of the examination follows the guidelines provided by the IMA Statement of Ethical Standards. This section contains ethical considerations for both management accountants and the organisation altogether.
The principles and standards are straightforward and simple. Candidates must memorise the names of the four standards and should know how they are applied in different real-world, practical business situations.
CMA (US) Examination – Part 2 Pass Rate
As per historical records, the pass percentage for Part 2 of the examination is 42%. The pass percentage is higher for Part 1, although it is difficult to ascertain the actual reason. Since more candidates tend to attempt Part 1 before Part 2, they are usually better prepared prior to the second part of the examination.
If the candidate is committed to the examination, picks the appropriate review course, and follows an effective strategy for studying, his or her chances of passing are higher.