CMA (USA) Part 2 Practice Test - Practice Kit 1

CMA Part 2 is all about Strategic Financial Management. In this 4-hour long exam, you will have to complete 100 multiple choice questions and two essay scenarios.

To make it to the essay portion of the exam, you will have to earn at least 50% on the multiple-choice section.

There are six topics covered in CMA Part 2:

1. Financial Statement Analysis – 20%

2. Corporate Finance – 20%

3. Decision Analysis – 25%

4. Risk Management – 10%

5. Investment Decision – 10%

6. Professional Ethics – 15%

Financial Statement Analysis

• Basic Financial Statement Analysis

• Financial Ratios

• Profitability Analysis

• Special Issues

It’s pretty clear that for this topic you will have to understand what financial statements are, and how to perform fundamental analysis on them.

Corporate Finance

• Risk and return

• Long-term financial management

• Raising Capital

• Working Capital Management

• Corporate restructuring

Corporate Finance is an important topic, as it covers 20% of the exam material in Part 2.

To nail this section of the CMA certification test, you will need to get familiar with risk and return, and long term financial management, such as term structures for interest rates, cost of capital and various types of financial instruments.

Decision Analysis

• Cost/volume/profit analysis

• Marginal analysis

• Pricing

Cost, Volume, Profit Analysis

Here you will want to know how to calculate the break-even analysis; the point where total costs and total revenue are equal.

You will also need to know how to judge profit performance and be comfortable analyzing multiple products.

Marginal Analysis

Marginal analysis is essentially “make vs. buy” decisions that take into consideration sunk and opportunity costs, special orders and pricing, capacity considerations, and more.

Pricing

Pricing methodologies and product life cycle considerations will be covered in this section. Additionally, you should feel confident in your knowledge and understanding of target costing, the elasticity of demand, and market structure considerations.

Risk Management

• Enterprise Risk

This section makes up a meager 10% of your exam and focuses on enterprise risk. This means understanding the different types of risk and how to assess them, as well as knowing how to mitigate and manage the level of risk.

Investment Decisions

• Capital budgeting process

• Capital investment analysis methods

Professional Ethics

• Business ethics

• Ethical considerations for management accounting and financial management professionals

• Ethical considerations for an organization

Not only will you have to understand basic business ethics, but you should be familiar with ethical considerations for both an organization, and for accounting professionals.

This includes knowing the IMA’s Statement of Ethical Professional Practice, and their statement on Management Accounting, “Values and Ethics: From Inception to Practice.”