MBA Story:
Why MBA? and why London Business School?
After reaching my mid-level career stage, I realized that what got me here will not get me there. Although CMA gave me a very solid technical background in business, to reach the executive level requires a different set of skills, broader exposure, a different way of thinking. After extensive research, MBA started appearing as a suitable solution to my requirement.
The second phase of research was where to do MBA? which business school? My dream was to do MBA from one of the top 10 business schools. So, I got the top 10 schools from Financial Times and started looking at those amazing schools to choose one of them.
What Did I Learn From CMA?
CMA was the foundation and the base knowledge that gave me boost during my early career stages.
Although I passed CMA when it was four parts, and few months later it became two parts only, I’m happy that I did the extensive one, because the knowledge gained out of it was magnificent. Below is the content of the four parts that I happily cleared its exams:
P1: Business Analysis
– Business Economics.
– Global Business. Internal Controls.
– Quantitative Methods.
– Financial Statement Analysis.
P3: Strategic Management
– Strategic Planning.
– Strategic Marketing.
– Corporate Finance.
– Decision Analysis.
– Investment Decisions.
P2: Management Accounting and Reporting
– Budget Preparation.
– Cost Management.
– Information Management.
– Performance Measurement.
– External Financial Reporting.
P4: Business Applications
Organization Management. Organization Communication. Behavioral Issues. Ethical Considerations
Content Specification Outlines for the Certified Management Accountant (CMA) Examinations
The content specification outlines presented below represent the body of knowledge that I covered on the CMA examinations. Click on each part title to see the details:
Part 1 - Business Analysis
A. Business Economics
1. Factors affecting the individual firm
a. The laws of supply and demand
b. Elasticity of demand and elasticity of supply
c. Government intervention in market operations
d. U.S. antitrust policies
2. Consumption of goods
a. Marginal utility theory
b. Indifference curve analysis
3. Production cost functions
a. Economic costs
b. Economic profits
c. Production costs in the short run
d. Production costs in the long run
e. Economies and diseconomies of scale
4. Market structures and pricing
a. Pure competition
b. Monopoly
c. Monopolistic competition
d. Oligopoly
e. Effects of boycotts and cartels on prices and output
5. The economy as a system of markets
a. Production and demand for economic resources
b. The labor market
6. Issues in Macroeconomics
a. Inflation
b. Employment and unemployment
c. Economic growth
7. Domestic Output, National Income, and Price Levels
a. Gross domestic product
b. Other national accounts
c. Price levels
8. Business cycles
a. Nature of business cycles
b. Terminology used to explain business cycles
c. Reasons for fluctuations
d. Leading economic indicators
9. Fiscal policy
a. Theory of fiscal policy
b. Tools of fiscal policy
c. Taxation policies
10. Money and monetary policy
a. Nature of money
b. Creation of money
c. Money supply and the demand for money
d. Relationship between money and national income
e. The Federal Reserve Board
f. Instruments and objectives of monetary policy
B. Global Business
1. Global trade
a. Trade terminology
b. Comparative advantage in trade
c. Free trade
d. Tariffs
e. Non-tariff trade barriers
f. International agreements on trade and tariffs
2. Foreign exchange
a. Balance of payments
b. Trade deficits and surpluses
c. Fixed, flexible and floating exchange rates
3. Other global topics
a. World Bank and International Monetary Fund
b. International capital investments
c. Financing international trade
d. Transfer pricing
e. Legal and ethical issues in global business
C. Internal Controls
1. Risk assessment and controls
a. Internal control structure and management philosophy
b. Internal control policies for safeguarding and assurance
c. Internal control risk
d. U.S. Foreign Corrupt Practices Act internal control requirements
.
2. Internal auditing
a. Responsibility and authority of the internal audit function
b. Types of audits conducted by internal auditors
c. Internal audit assistance provided to management
3. Systems controls and security measures
a. General accounting system controls
b. Application and transaction controls
c. Network controls
d. Flowcharting to assess controls
e. Backup controls
f. Disaster recovery procedures
D. Quantitative Methods
1. Forecasting analysis
a. Regression analysis
b. Learning curve analysis
c. Exponential smoothing
d. Time series analysis
2. Linear programming
a. Scarce resource considerations
b. Capacity constraints
3. Network analysis
a. Critical Path Method (CPM)
b. Program Evaluation Review Technique (PERT)
4. Probability concepts
a. Probability distribution tables
b. Expected value
5. Decision tree analysis
a. Assumptions of decision tree analysis
b. Estimating cash flow and probability values
6. Other quantitative techniques
a. Sensitivity analysis
b. Simulation
c. Queueing theory
d. Markov process
E. Financial Statement Analysis (25% – Level B)
1. Development of accounting standards
a. Due process in developing U.S. accounting standards
b. Qualitative characteristics of accounting information
c. Role of the SEC in U.S. standard setting
d. User groups that influence accounting standards
e. Types of pronouncements issued
f. International Accounting Standards Board
2. Financial statement assurance
a. Auditor and management responsibilities
b. Audit reports
3. Short-term liquidity
a. Working capital analysis
b. Operating activity analysis
c. Other ratios and liquidity
4. Capital structure and solvency
a. Capital structure analysis
b. Solvency analysis
c. Asset-based measures
d. Earnings coverage
e. Other ratios and solvency measures
5. Return on invested capital
a. Components of return on invested capital
b. Return on assets
c. Return on common equity
d. Other measures of return and capital growth
6. Profitability analysis
a. Income measurement analysis
b. Revenue analysis
c. Cost of sales analysis
d. Expense analysis
e. Variation analysis
f. Other ratios and profitability measures
7. Earnings-based analysis
a. Earnings quality
b. Earnings persistence
c. Earnings-based valuation
d. Earnings power and forecasting
e. Other ratios and earnings measures
8. Other analytical issues
a. Common-size statements
b. International considerations
c. Effects of changing prices and inflation
d. Limitations of ratio analysis
e. Accounting versus economic profit/value
f. Market value versus book value
g. Non-financial considerations
Part 2 - Management Accounting and Reporting
A. Budget Preparation
1. Budgeting concepts
a. Operations and performance goals
b. Characteristics of a successful budget process
c. Resource allocation
d. Other budgeting concepts
2. Budget systems
a. Annual business plans (master budgets)
b. Project budgeting
c. Activity-based budgeting
d. Zero-based budgeting
e. Continuous (rolling) budgets
f. Kaizen budgeting
g. Flexible budgeting
3. Annual profit plan and supporting schedules
a. Operational budgets
b. Financial budgets
c. Capital budgets
d. Pro forma financial statements
B. Cost Management
1. Terminology
a. Product versus period cost
b. Manufacturing versus non-manufacturing
c. Direct versus indirect
d. Fixed versus variable
2. Measurement concepts
a. Cost behavior and cost objects
b. Actual/normal/standard costs
c. Absorption (full) and variable (direct) costing
d. Joint product and by-product costing
3. Accumulation systems
a. Job order costing
b. Process costing
c. Activity-based costing
d. Life-cycle costing
e. Other costing methods
4. Overhead costs
a. Fixed and variable overhead expenses
b. Plant-wide versus departmental overhead
c. Determination of allocation base
d. Allocation of service department costs
C. Information Management (15% – Level A)
1. Nature and purpose of an information system
a. Business information systems
b. Transaction processing systems
c. Management information systems
2. Systems development and design
a. Systems development life cycle
b. Cost benefit analysis
3. Technology of information systems
a. Data communications, networks, and client/server systems
b. Database management systems
c. Decision support systems
d. Artificial intelligence and expert systems
e. Spreadsheets
f. Internet and intranet
4. Electronic commerce
a. Electronic data interchange
b. Business-to-business
c. Other e-commerce technologies
5. Integrated enterprise-wide data model
a. Enterprise resource planning (ERP) systems
b. Data warehousing and data mining
D. Performance Measurement
1. Cost and variance measures
a. Comparison of actual to planned results
b. Use of flexible budgets to analyze performance
c. Management by exception
d. Use of standard cost systems
e. Analysis of variation from standard cost expectations
2. Responsibility centers and reporting segments
a. Types of responsibility centers
b. Transfer pricing models
c. Reporting of organizational segments
3. Financial measures
a. Product profitability analysis
b. Business unit profitability analysis
c. Customer profitability analysis
d. Return on investment
e. Residual income
f. Economic value added
g. Market value added
h. Investment base issues
i. Cash flow return on investment
j. Effect of international operations
4. Balanced scorecard
a. Critical success factors
b. Financial measures
c. Customer satisfaction measures
d. Internal business process measures
e. Innovation and learning measures
f. Effective use of a balanced scorecard
5. Quality considerations
a. Total quality management concepts and techniques
b. Techniques to analyze quality problems
c. Relationship between quality and productivity
d. Cost of quality analysis
e. Cost of design quality
E. External Financial Reporting
1. Objectives of external financial reporting
a. Information on resources and obligations
b. Comprehensive income information
c. Cash flow information
2. Financial accounting fundamentals
a. Accounting assumptions and conventions
b. Recognition and measurement concepts
c. Financial statement elements
d. Special topics
3. Financial statements and statement users
a. Statement of Cash Flow
b. Statement of Financial Position (balance sheet)
c. Statement of Earnings (income statement)
d. Users of financial statements
e. Needs of external users
4. Recognition, measurement, valuation, and disclosure
a. Cash and marketable securities
b. Accounts receivable
c. Inventory
d. Investments
e. Property, plant, and equipment
f. Intangibles
g. Current liabilities
h. Long-term liabilities and bonds payable
i. Equity transactions and earnings per share
j. Revenues
k. Expenses
l. Comprehensive income
m.Segment reporting
n. Multinational considerations
5. The SEC and its reporting requirements
a. Acts establishing the SEC and its power
b. SEC reporting requirements for public companies
c. SEC disclosure requirements for public companies
d. Provisions of Sarbanes-Oxley legislation
6. The annual report
a. Audit services related to financial reporting
b. Management’s responsibility for financial statements
c. Role of the audit committee/Board of directors
d. Independent auditor’s report
e. Other components of the annual report
Part 3 - Strategic Management
A. Strategic Planning
1. Strategic and tactical planning
a. Analysis of external factors affecting strategy
b. Analysis of internal factors affecting strategy
c. Long-term mission and goals
d. Alignment of tactics with long-term strategic goals
e. Characteristics of successful strategic/tactical planning
f. Contingency planning
2. Manufacturing paradigms
a. Just-in time manufacturing
b. Material requirements planning (MRP)
c. Theory of constraints and throughput costing
d. Capacity management and analysis
e. Other production management theories
3. Business process performance
a. Value chain analysis
b. Value-added concepts
c. Process analysis
d. Benchmarking
e. Activity-based management
f. Continuous improvement (kaizen) concepts
g. Best practice analysis
B. Strategic Marketing
1. Strategic role within the firm
a. Link between strategic planning and the marketing process
b. SWOT analysis
c. Designing the business portfolio
2. Managing marketing information
a. Developing marketing information
b. Analyzing marketing information
3. Market segmentation, targeting, and positioning
a. Market segmentation
b. Market targeting
c. Selecting a positioning strategy
4. Managing products and services
a. Product attributes and branding
b. Product line and product mix decisions
c. Product development
d. Product life-cycle
e. Marketing strategies for service firms
5. Pricing strategy
a. Internal and external factors
b. Pricing approaches
c. New product pricing strategies
d. Product-mix pricing strategies
6. Promotional mix and distribution strategy
a. Advertising, sales promotion, and public relations
b. Personal selling and direct marketing
c. Setting the overall marketing communications mix
d. Distribution channels
C. Corporate Finance
1. Risk and return
a. Calculating return
b. Types of risk
c. Relationship between risk and return
d. Risk and return in a portfolio context
e. Diversification
f. Capital asset pricing model (CAPM)
2. Financial instruments
a. Bonds
b. Common stock
c. Preferred stock
d. Derivatives
e. Other long-term financial instruments
3. Cost of capital
a. Weighted average cost of capital
b. Cost of individual capital components
c. Calculating the cost of capital
d. Marginal cost of capital
e. Use of cost of capital in capital investment decisions
4. Managing current assets
a. Working capital terminology
b. Cash management
c. Marketable securities management
d. Accounts receivable management
e. Inventory management
5. Financing current assets
a. Types of short-term credit
b. Minimizing the cost of short-term credit
D. Decision Analysis
1. Decision process
a. Steps in the decision process
b. Evaluation of decision results
2. Relevant data concepts
a. Future oriented revenues and costs
b. Sunk costs
c. Opportunity costs
3. Cost/volume/profit analysis
a. Breakeven analysis
b. Profit performance and alternative operating levels
c. Analysis of multiple products
4. Marginal analysis
a. Special orders and pricing
b. Make versus buy
c. Sell or process further
d. Add or drop a segment
5. Cost-based pricing
a. Comparing to market-based prices
b. Setting prices
c. Target costing
E. Investment Decisions
1. Capital budgeting process
a. Definition
b. Stages of capital budgeting
c. Incremental cash flows
d. Income tax considerations
2. Discounted cash flow analysis
a. Net present value
b. Internal rate of return
c. Comparison of NPV and IRR
3. Payback and discounted payback
a. Uses of payback method
b. Limitations of payback method
c. Discounted payback
4. Ranking investment projects
a. Capital rationing
b. Mutually exclusive projects
c. Ranking methods
5. Risk analysis in capital investment
a. Sensitivity analysis
b. Certainty equivalents
c. Other approaches to dealing with risk
6. Real options in capital investments
a. Definition and types of real options
b. Valuation of real options
Part 4 – Business Applications
The final part of the CMA examination is a three-hour test consisting of several business-oriented
essay questions and problems requiring both written and quantitative responses. These questions
will include a combination of a variety of topics from the content specifications for Parts 1, 2, and 3
as well as some special topics outlined below. These topics will be presented in realistic business
situations, and candidates will be expected to show an understanding of the appropriate principles
and practices. It should be noted that Part 4 may only be taken after successful completion of Parts
1, 2, and 3.
In addition to the topics outlined in the content specifications for Parts 1, 2 and 3, the Part 4
examination will include the following topics. There will be at least one question that will be
devoted to an ethical situation presented in a business-oriented context.
Additional Part 4 Topics
1. Organization management
a. Organization structures
b. Jobs and teams
c. Leadership styles and sources of power
d. Motivational theories
e. Diversity issues
2. Organization communication
a. Communication models
b. Deterrents to effective communication
3. Behavioral issues
a. Alignment of organizational goals
b. Issues in budgeting and standard setting
c. Issues in reporting and performance evaluation
4. Ethical considerations
a. Provisions of “Standards of Ethical Conduct for IMA Members”*
b. Corporate responsibility for ethical conduct
c. Evaluation and resolution of ethical issues such as
– Fraudulent reporting
– Manipulation of analyses and results
– Unethical behavior in developing budgets and standards
– Manipulation of decision factors
*Source: www.imanet.org.
Copyright © by Institute of Certified Management Accountants
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