CMA Part 2 Exam Prep 2026 - A-Financial Statement Analysis

This course covers the learning outcomes to be tested by the IMSA on the CMA exam.

Part 2 – Strategic Financial Management

A. Financial Statement Analysis (20% - Levels A, B, and C)

Part 2 – Section A.1. Comparative financial statement analysis

The candidate should be able to:

for the balance sheet and income statement, prepare and analyze common-size

financial statements (i.e., calculate percentage of assets and sales, respectively;

also called vertical analysis)

for the balance sheet and income statement, prepare a comparative financial

statement horizontal analysis (i.e., calculate year-over-year trends for every item

on the financial statement compared to a base year)

calculate the growth rate of individual line items on the balance sheet and

income statement

analyze financial statement data to identify patterns and trends that can be used

to make business decisions

Part 2 – Section A.2. Financial ratios

The candidate should be able to:

Liquidity

calculate and interpret the current ratio, the quick (acid-test) ratio, the cash ratio,

the cash flow ratio, and the net working capital ratio

explain how changes in one or more of the elements of current assets, current

liabilities, and/or unit sales can change the liquidity ratios and calculate that

impact

demonstrate an understanding of the liquidity of current liabilities

Leverage

define solvency and distinguish from liquidity

define operating leverage and financial leverage

calculate degree of operating leverage and degree of financial leverage

demonstrate an understanding of the effect on the capital structure and solvency

of a company with a change in the composition of debt vs. equity by calculating

leverage ratios

calculate and interpret the financial leverage ratio (equity multiplier) and

determine the effect of a given change in capital structure on this ratio

calculate and interpret the following ratios: debt-to-equity, long-term debt-to-

equity, and debt-to-total assets

Activity

define, calculate, and interpret the following ratios: fixed charge coverage

(earnings to fixed charges), interest coverage (times interest earned), and cash

flow to fixed charges

discuss how capital structure decisions affect the risk profile of a company

calculate and interpret accounts receivable turnover, inventory turnover, and

accounts payable turnover

calculate and interpret days sales outstanding in receivables, days sales in

inventory, and days purchases in accounts payable

define and calculate the operating cycle and the cash cycle of a company

calculate and interpret total asset turnover and fixed asset turnover

Profitability

calculate and interpret gross profit margin percentage; operating profit margin

percentage; net profit margin percentage; and EBITDA margin percentage

Market

General

calculate and interpret ROA and ROE

calculate and interpret the market/book ratio and the price/earnings ratio

calculate and interpret book value per share

identify and explain the limitations of book value per share

calculate and interpret basic and diluted EPS

calculate and interpret earnings yield, dividend yield, dividend payout ratio, and

shareholder return

identify the limitations of ratio analysis

demonstrate a familiarity with the sources of financial information about public

companies and industry ratio averages

evaluate the financial strength and performance of an entity based on multiple

ratios

Part 2 – Section A.3. Profitability analysis

The candidate should be able to:

demonstrate an understanding of the factors that contribute to inconsistent

definitions of “equity,” “assets,” and “return” when using ROA and ROE

determine the effect on return on total assets of a change in one or more

elements of the financial statements

identify factors to be considered in measuring income, including estimates,

accounting methods, disclosure incentives, and the different needs of users

explain the importance of the source, stability, and trend of sales and revenue

demonstrate an understanding of the relationship between revenue and

receivables and revenue and inventory

determine and analyze the effect on revenue of changes in revenue recognition

and measurement methods

analyze cost of sales by calculating and interpreting the gross profit margin

distinguish between gross profit margin, operating profit margin, and net profit

margin, and analyze the effects of changes in the components of each

define and perform a variation analysis (percentage change over time)

calculate and interpret sustainable equity growth

Part 2 – Section A.4. Special issues

The candidate should be able to:

demonstrate an understanding of the impact of foreign exchange rate changes on

financial statements

1. identify and explain issues in the accounting for foreign operations (e.g.,

historical vs. current rate and the treatment of translation gains and losses)

2. define functional currency

3. calculate the financial ratio impact of a change in exchange rates

4. discuss the possible impact on management and investor behavior of

volatility in reported earnings

demonstrate an understanding of the impact of inflation on financial ratios and

the reliability of financial ratios

describe how to adjust financial statements for changes in accounting treatments

(principles, estimates, and errors) and how these adjustments impact financial

ratios

distinguish between book value and market value, and distinguish between

accounting profit and economic profit

identify the determinants and indicators of earnings quality and explain why