In order to become a CMA, you have to go through the CMA entrance exam. What exactly does it cover? Is it very difficult? Let’s take a look.
CMA Entrance Exam: The Format
The exam is 100% computerized with 100 multiple choice questions and two 30-minute essay questions. It consists of the following parts:
- Financial Planning, Performance and Control.
- Financial Decision Making.
Candidates are free to take either one or both parts of the exam within the same test windows. The exams have to be completed within 3 years, counting from the date the candidates pay the entrance fee.
CMA Entrance Exam Content
The following curriculum and format is based on the latest release:
- Planning, budgeting, and forecasting.
- Performance management.
- Cost management.
- Internal controls.
- Professional ethics.
- Financial statement analysis.
- Corporate finance.
- Decision analysis and risk management.
- Investment decisions.
- Professional ethics.
More Information On Each Topics of the CMA Exam
Planning, budgeting, and forecasting (30%)
- How to annual profit plans and supportuing schedules.
- Different types of budget e.g. activity-based budgeting, project budgeting and flexible budgeting.
- Top-level planning and analysis.
- Forecasting including quantitative methods e.g. regression analysis and learning curves.
Performance Management (25%)
- How to analyze the finance statement items such as revenue, cost, profit and investment in assets.
- Variance analysis based on flexible budgets and standard costs.
- Responsibility accounting for revenue, cost, contribution and profit centers.
- Balanced scorecards
Cost Management (25%)
- Cost concepts, flows and terminology.
- Alternative cost objectives.
- Cost measurement concepts.
- Cost accumulation system e.g. job order costing, process costing, activity-based costing.
- Overhead cost allocation.
- Operational efficiency and business process performance topics e.g. JIT, MRP, theory of constraints, value chain analysis, benchmarking, ABM and continuous improvement.
Internal Control (15%)
- Risk assessment
- Internal control environment, procedures and standards.
- Responsibility and authority of internal auditing.
- Types of audits.
- Assessing the adequacy of accounting information systems control.
- Ethical consideration for management accountants.
Financial Statement Analysis (25%)
- Principal financial statements and their uses.
- Limitation of financial statement information.
- Interpretation and analysis of financial statement e.g. ratio and comparative analyses.
- Market value vs book value.
- Fair value accounting.
- Major difference between IFRS and US GAAP.
- Off-balance sheet financing.
- Cash-flow statement preparation, analysis and reconciliation.
- Earnings quality.
Corporate Finance (25%)
- Types of risk.
- Measures of risk.
- Portfolio management.
- Options and futures.
- Capital instruments for long-term financing.
- Dividend policy.
- Factors influencing the optimal capital structure.
- Cost of capital.
- Managing and financing working capital.
- Mergers and acquisitions.
- International finance.
Decision Analysis and Risk Management (25%)
- Relevant data concepts.
- Cost-volume-profit analysis.
- Marginal analysis.
- Make vs buy decisions.
- Income tax implications for operational decision analysis.
- Operational risk, Hazard risk and financial risk and strategic risk.
Investment Decision (20%)
- Cash flow estimates.
- Concepts of DCF (discounted cash flow), net present value, IRR (internal rate of return).
- Non-discounting analysis techniques.
- Income tax implications for investment decisions.
- Ranking investment projects.
- Risk analysis.
- Real options.
- Valuation models.
Professional Ethics (5%)
- Ethical consideration for the organization.
It Looks Like An Awful Lot of Stuff To Study. What’s The Pass Rate?
The latest released pass rate has a rather dismal statistics: 33% for Part 1 and 48% for Part 2. Having said that, if you are looking at candidates from the “Americas” (mostly US) only, the pass rate is a more encouraging of 51-60% for the two parts. For details please refer to this page on CMA exam pass rate.
Now… Ready To Join The CMA Program?
For more information on the CMA entrance exam as well as tips on study tactics, please consider signing up to my e-course which is completely free. You can learn about the mini e-course here or sign up directly below.
Source: CMA Handbook