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CMA Exam Part 2: Certified Management Accountant Exam Part 2

cma exam part 2

Certified Management Accountant (CMA) exam has 2 parts: Part 1 and Part 2. Each part addresses a different assortment of topics in order to provide an objective measure of your management accounting knowledge and skills. To pass the exam, you have to be well acquainted with each part. Learn about CMA exam Part 1, then use this information to help you master CMA exam Part 2.

CMA Part 2 Syllabus

CMA Part 2: Strategic Financial Management

Content Area Coverage Percentage Coverage Level
A. Financial Statement Analysis 20% Level C
B. Corporate Finance 20% Level C
C. Decision Analysis 25% Level C
D. Risk Management 10% Level C
E. Investment Decisions 10% Level C
F. Professional Ethics 15% Level C

As this table shows, Part 2 of the CMA exam is called Financial Decision Making and has six content areas.

The Institute of Certified Management Accountants (ICMA) produces the CMA exam and reveals the information covered by each exam part in the content specification outlines (CSOs). The CSOs serve to

  • Lay the foundation for the development of each exam part,
  • Ensure each part has consistent coverage,
  • Communicate the details of the exam content to interested parties,
  • Help candidates prepare for the exam, and
  • Equip review providers with information for their courses.

Within the CSOs, a coverage percentage appears next to each exam part topic as a representation of that topic’s relative weight. The CSOs also assign a coverage level to each exam topic, ranging from introductory knowledge to a thorough understanding of the subject matter. The three levels of coverage are:

  1. A: Requiring the skill levels of knowledge and comprehension.
  2. B: Requiring the skill levels of knowledge, comprehension, application, and analysis.
  3. C: Requiring the skill levels of knowledge, comprehension, application, analysis, synthesis, and evaluation.

The coverage levels build on each other, so Level C may contain the requirements of Level A and Level B.

The CSOs don’t tell you the order or the frequency of the topics on the exam.

Topics of CMA Part 2

Part 2 focuses on financial decision making. In the CMA Handbook, the Institute of Management Accountants (IMA), the worldwide association of accountants and financial professionals in business that offers the CMA certification, summarizes the CMA Part 2 content areas and topics.

A. Financial Statement Analysis

  1. Basic financial statement analysis
    • a. Common size financial statements
    • b. Common base year financial statements
  2. Financial ratios
    • a. Liquidity
    • b. Leverage
    • c. Activity
    • d. Profitability
    • e. Market
  3. Profitability analysis
    • a. Income measurement analysis
    • b. Revenue analysis
    • c. Cost of sales analysis
    • d. Expense analysis
    • e. Variation analysis
  4. Special issues
    • a. Impact of foreign operations
    • b. Effects of changing prices and inflation
    • c. Impact of changes in accounting treatment
    • d. Accounting and economic concepts of value and income
    • e. Earnings quality

You also must be informed about special issues such as foreign currency fluctuations, fair value accounting, and US GAAP vs IFRS.

The coverage of this section is similar to that of Section A in Part 1, which discusses financial accounting, but the focus is more on analysis and comparison using key financial data and ratios. In other words, Part 1 Section A requires you to understand past performance using financial statements, while Part 2 Section A involves evaluating future prospects.

B. Corporate Finance

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

To do well with this section, you must understand short-term and long-term financial management as well as the benefits and limitations of major financial instruments.

You will see a mix of conceptual and computational questions. The variety of questions can be very broad, but the calculations are likely quite basic.

C. Decision Analysis

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

This section will test you on how management accountants provide data and perform analysis for the decision-making process.

Decision analysis also includes risk management, but we will go through this topic in Section D.

D. Risk Management

  1. . Enterprise risk
    • a. Types of risk
    • b. Risk identification and assessment
    • c. Risk mitigation strategies
    • d. Managing risk

Organizational managers need to identify, assess, and respond to risks in order for the organization to achieve its goal. The CMA exam Part 2 concentrates on the ERM model. You are most likely to get conceptual questions in this section.

E. Investment Decisions

  1. Capital budgeting process
    • a. Stages of capital budgeting
    • b. Incremental cash flows
    • c. Income tax considerations
    • d. Evaluating uncertainty
  2. Capital investment analysis methods
    • a. Net present value
    • b. Internal rate of return
    • c. Payback
    • d. Comparison of investment analysis methods

This section covers how management accountants help make important decisions about whether to proceed with an investment or choose between investment alternatives.

F. Professional Ethics

  1. Business ethics
    • a. Moral philosophies and values
    • b. Ethical decision making
  2. Ethical considerations for management accounting and financial management professionals
    • a. IMA’s Statement of Ethical Professional Practice
    • b. Fraud triangle
    • c. Evaluation and resolution of ethical issues
  3. Ethical considerations for the organization
    • a. Organizational factors and ethical culture
    • b. IMA’s Statement on Management Accounting, “Values and Ethics: From Inception to Practice”
    • c. Ethical leadership
    • d. Legal compliance
    • e. Responsibility for ethical conduct
    • f. Sustainability and social responsibility

The content of this section is based on the IMA Statement of Ethical Standards. The principles and standards are concise and easy to understand. Candidates should memorize the names of the four standards, and more importantly, know how they are applied in real business situations.

CMA Exam Part 2 Format

Each CMA exam part contains a specific number of 2 types of questions:

  • 100 Multiple-choice questions (MCQs)
  • 2 Essay questions

You’ll have 4 hours of total testing time for each exam part, and your time will be divided like this:

  • 3 hours for the MCQs
  • 1 hour for the essays

You will only be eligible to move on to the essay section if you answer at least 50% of the MCQs correctly. If you are eligible, the exam will send you on to the essays once you’ve answered all of the MCQs or after 3 hours have passed, whichever comes first. You can’t go back to the MCQ section once you leave it: you have to remain in the essay section.

In the essay section, you read 2 scenarios describing a typical business situation and complete 8-10 written response or calculation questions based on these scenarios.

CMA Part 2 Questions

The CMA exam MCQs have 3 parts:

  1. The question stem: includes the question, necessary details for answering the question, and sometimes, irrelevant information as well.
  2. The correct answer choice: responds to the question stem better than any of the other answer options.
  3. The 3 distractors: appear to be correct at first glance but are actually incorrect.

Along with the more common, straightforward MCQ question, you’ll see a few other types of MCQs on each exam part:

  • Negative question stem: demonstrates that the correct answer choice is an exception by using words like “not,” “least, “false,” and “except”.
  • Combination of correct answers: asks which of three to four numbered statements are correct by providing answer choices with different combinations of the statement numbers.
  • Multiple variables: asks candidates to select the answer choice comprising all the correct variables presented in multiple columns of variables.

Essay Questions on CMA Part 2

Part 2 of the CMA exam expects you to respond to 2 essay scenarios by answering about 3-5 questions. To answer the questions, you may have to write a few paragraphs or perform a calculation.

Subject matter experts grade the CMA exam essays and award partial credit when merited. Because there is the opportunity for partial credit, you should always write as much as you can about the topic when answering a conceptual essay question, as this process will help you maximize your points.

For that same reason, you should show your work when completing computational questions. An example of getting partial credit would be receiving points for using the correct formula even if you made a mathematical error.

When making a chart or table, keep the formatting simple and the information organized clearly.

CMA Part 2 Pass Rate

The historical pass rate of CMA Exam Part 2 is around 35%.

CMA Exam Pass Rates

2013* 2014* 2015* 2016* 2017*
Part 2 42% 49% 55% 50% 50%

Because CMA exam Part 2 boasts higher pass rates than Part 1, it looks like Part 2 is easier. However, the reason for Part 2’s higher pass rate could be that most candidates take Part 1 before Part 2, so they are typically more prepared when they reach the second part of the exam. However, as neither part consistently presents a pass rate higher than 50%, there’s no doubt that the CMA exam, on the whole, is quite challenging.

CMA Part 2 Passing Score and Grading Process

To pass either exam part, you must achieve a score of 360. The CMA exam scores are scaled and range from 0 to 500. The ICMA transforms your raw score (the number of questions you got right) to a scaled score so that no matter which test form you take, the ICMA can report the scores with uniformity and consistency.

CMA Grading Process

The ICMA grades the CMA exam essays offline in a long and laborious process, so you won’t receive your CMA Part 1 exam results of a pass or fail immediately. In order to achieve consistent, accurate, and fair grading, the ICMA grades all of the CMA exams taken within a testing window at the same time and performs sample grading first to ensure that every solution has been accounted for. Reviewers check the grades throughout the grading process and, once the grading is complete, conduct an additional review of exams on the border of passing.

The ICMA calculates your final score by adding the score of the MCQ section to the score of the essay section. Your score for the entire part will be scaled to reflect the total weighted score of pass/fail. You don’t have to pass both sections; your total score determines your pass/fail status.

You should receive your exam results about 6 weeks from the end of the month in which you tested. They will be emailed to you and posted to your online profile. If you failed an exam part, Prometric will email you a Performance Report about 14 days after your results show up in your candidate profile. Your Performance Report will label your performance for each of the key topic areas in the MCQ section as either satisfactory, marginal, or unsatisfactory. You’ll also see your overall performance on the essays.

CMA Part 2 Study Time

You can sit for both Part 1 and Part 2 of the CMA exam at one of Prometric testing centers around the world. You can only take an exam part during these three testing windows:

  1. January/February
  2. May/June
  3. September/October

Various CMA exam industry voices have suggested different amounts of study time for Part 2.

CMA Exam Part 2 Study Time

IMA Gleim Wiley Hock My Recommendation
Part 2 150-170 100 90 150 60 minimum / 120 maximum

My minimum CMA exam study time recommendation for Part 2 is based on how much time you’ll need to complete these specific activities within the Gleim CMA Review System:

  • Complete the diagnostic quizzes
  • Read the textbook
  • Answer the True/False questions
  • Watch the Gleim Instruct videos
  • Take the MCQ practice quizzes
  • Complete one practice exam

My maximum recommendation also includes answering all of the practice quizzes in the test bank and reviewing the answer explanations for your incorrect answers.

The biggest factor affecting how much time you’ll need to study for the CMA exam is your level of familiarity with the material at the start of your review. But no matter how much you know at the beginning of your studies, you must still resolve to study for as long as it takes to reach the cognitive levels at which the exam tests.

If you’re already fairly confident with several of the Part 2 topics, you can probably base your study schedule on the minimum amount of time I recommend. If a good portion of the CMA exam material is new to you, you should plan to study for my suggested maximum amount of study time. To reach these study time marks, you’ll need to study for this many weeks and hours per week:

CMA Exam Part 2 Study Schedule

Total Hours Number of Weeks Number of Hours Per Week Approximate Number of Hours Per Day
Minimum 60 6 10 ~1 ½
Maximum 120 12 10 ~1 ½

Study Plan for CMA Part 2

Make your CMA Part 2 study plan by following these steps:

  • Evaluate your current weekly schedule to identify the number of study hours you have available each week.
    • Lay out a general timeline of your week covering all your weekly activities and the amount of time each takes.
    • Tally up all your free hours to ensure it’s enough to accommodate your CMA exam studies.
    • To acquire more study time, determine the activities you can remove or reduce until you’re done with the CMA exam.
  • Decide to study for 1-2 hours a day.
    • Complete a few short study sessions or one longer study session a day.
    • Study when most convenient for your mind and body (you want to feel awake, alert, and comfortable).
    • Rely on your study planner to stay on track.
  • Schedule your exam date.
    • Once you know how many weeks you’ll require to be completely prepared, determine which CMA testing window you will be able to test in.
    • Contact Prometric (either via their 800 number or website) as soon as possible to secure your preferred test date.
    • Pick 2 or 3 equally ideal test dates in case of unavailability.

CMA Part 2 Practice Questions

Download free CMA Part 2 practice questions and free CMA study materials.

CMA Part 2 Syllabus Overlap with Other Professional Exams

If you’ve already taken a different professional accounting exam or are planning to take another after the CMA exam in the future, I’ve got good news for you: There is quite a bit of content overlap among the CMA exam and these accounting and finance exams.

CFA Exam

There is some overlap in Section A (Financial Analysis) with the CFA FRA section as well as with the entire section on corporate finance. There is also a lot of coverage on Ethics in CFA Level 1. The Codes and Standards are different, but the underlying concepts as well as how the questions are formatted are quite similar.

CPA Exam

It’s hard to match the syllabus overlap by section, but you’ll see quite a few Financial Accounting and Reporting (FAR) and Business Environment and Concepts (BEC) questions in CMA Part 2. You’ll definitely have an advantage if you’ve taken these 2 exams recently.

CIA Exam

Unlike CMA Part 1, Part 2 has little overlap with the Internal Auditor exam except that it also covers professional ethics.

How to Pass CMA Exam Part 2

If you’ve already passed Part 1, you can take a day or 2 to relax, but you should get back into studying shortly thereafter so you stay in study mode. Remember, you’ve already done this, so you understand the testing layouts and types of questions you’ll see. Use this information to establish your study priorities and apply the best habits for studying effectively. If you’re starting with Part 2, finalize your study plan and dive right in so you can pass efficiently.

You’ll need to know many different financial ratios to pass Part 2. I suggest you memorize the formulas of all the key ratios and get very familiar with the analytical tools as well. You can make flashcards to help you accomplish this. In each flashcard, write down the formula and any important analysis information. You’ll also need to know the applications and understand how external investors use them to evaluate the company’s financial health.

Finally, you can prepare for Part 2 success by applying some of the portfolio management concepts to your personal investments in a spreadsheet. This practice will give you a better understanding of the concepts and ratios.

Above all, you must commit to the exam, pick the right review course, and study with a strong strategy. Taking these steps gives you a much better opportunity to pass.

More Help with the CMA Exam

Now that you know so much about CMA exam Part 2, you’re well on your way to passing it. But, to give yourself the best chance of achieving complete CMA exam success, you should also rely on the right CMA review course for you. You can use my comparison of the CMA review courses available to discover which course you need. Then, you can use my exclusive CMA review discounts to save big on the best CMA exam study materials.


About the Author Stephanie Ng

I am the author of How to Pass The CPA Exam (published by Wiley) and the publisher of this and several accounting professional exam prep sites.

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