CMA Part 2 Syllabus

CMA Part 2 Syllabus

CMA Part 2 syllabus is mainly related to financial decision making. Important topics are ratio analysis, corporate finance and ethics.

Financial Statement Analysis (25%)

1. Basic Financial Statement Analysis
   • Common size financial statements
   • Common base year financial statements
2. Financial Ratios
   • Liquidity
   • Leverage
   • Activity
   • Profitability
   • Market
3. Profitability analysis
   • Income measurement analysis
   • Revenue analysis
   • Cost of sales analysis
   • Expense analysis
   • Variation analysis
4. Special issues
   • Impact of foreign operations
   • Effects of changing prices and inflation
   • Off-balance sheet financing
   • Impact of changes in accounting treatment
   • Accounting and economic concepts of value and income
   • Earnings quality

Corporate Finance (20%)

1. Risk and return
   • Calculating return
   • Types of risk
   • Relationship between risk and return
2. Long-term financial management
   • Term structure of interest rates
   • Types of financial instruments
   • Cost of capital
   • Valuation of financial instruments
3. Raising capital
   • Financial markets and regulation
   • Market efficiency
   • Financial institutions
   • Initial and secondary public offerings
   • Dividend policy and share repurchases
   • Lease financing
4. Working capital management
   • Working capital terminology
   • Cash management
   • Marketable securities management
   • Accounts receivable management
   • Inventory management
   • Types of short-term credit
   • Short-term credit management
5. Corporate restructuring
   • Mergers and acquisitions
   • Bankruptcy
   • Other forms of restructuring
6. International finance
   • Fixed, flexible, and floating exchange rates
   • Managing transaction exposure
   • Financing international trade
   • Tax implications of transfer pricing

Decision Analysis (20%)

1. Cost/volume/profit analysis
   • Breakeven analysis
   • Profit performance and alternative operating levels
   • Analysis of multiple products
2. Marginal analysis
   • Sunk costs, opportunity costs and other related concepts
   • Marginal costs and marginal revenue
   • Special orders and pricing
   • Make versus buy
   • Sell or process further
   • Add or drop a segment
   • Capacity considerations
3. Pricing
   • Pricing methodologies
   • Target costing
   • Elasticity of demand
   • Product life cycle considerations
   • Market structure considerations

Risk Management (10%)

1. Enterprise risk
   • Types of risk
   • Risk identification and assessment
   • Risk mitigation strategies
   • Managing risk

Investment Decisions (15%)

1. Capital budgeting process
   • Stages of capital budgeting
   • Incremental cash flows
   • Income tax considerations
2. Discounted cash flow analysis
   • Net present value
   • Internal rate of return
   • Comparison of NPV and IRR
3. Payback and discounted payback
   • Uses of payback method
   • Limitations of payback method
   • Discounted payback
4. Risk analysis in capital investment
   • Sensitivity and scenario analysis
   • Real options

Professional Ethics (10%)

1. Ethical considerations for management accounting and financial management professionals
   • IMA’s “Statement of Ethical Professional Practice”
   • Fraud triangle
   • Evaluation and resolution of ethical issues
2. Ethical considerations for the organization
   • IMA’s Statement on Management Accounting, “Values and Ethics: From Inception to Practice”
   • S. Foreign Corrupt Practices Act
   • Corporate responsibility for ethical conduct