Corporate Finance: CMA Exam 2 - Section B

Author: Tom Coghlan

This course reviews a host of topics including long-term financial management, raising capital, and risk and return.

Whether you take the CMA exam or not, using your CPE credits to review the material tested on the Certified Management Accountant exam will help you to close the skills gap and move from compiling and reporting the results to a seat at the management table.

For more than 40 years, the CMA (Certified Management Accountant) certification has been the global benchmark for management accountants and financial professionals. Why? Because CMAs can explain the "why" behind numbers, not just the "what." And that can give you greater credibility, higher earning potential, and ultimately a seat at the leadership table.

Using CPE credits to prepare for the Certified Management Accountant (CMA) exam is a pathway to a more successful business career: one that opens doors, builds confidence, closes skills gaps, and lets you tap into a network of 85,000 professionals around the globe.

The CMA certification complements other credentials or degrees and tests for analytical and critical-thinking skills not covered in other exams. About one in three active CMAs in the U.S. are also CPAs.

The Certified Managerial Accountant (CMA) designation delivers:
1) The ability to see the big picture, both operational and financial.
2) The know-how to leverage technology, especially as it relates to gathering and analyzing data.
3) Insight into financial implications of business decisions and the ability to communicate them in way that is clear and jargon-free.

Publication Date: April 2017

Designed For
Financial officers, controllers and chief financial officers; financial, managerial and cost accountants; financial and business analysts; budget managers and analysts; risk managers; chief information officers and information technology professionals.

Topics Covered

• Risk and return
• Long-term financial management
• Raising capital
• Working capital management
• Corporate restructuring
• International finance

Learning Objectives

• Demonstrate understanding of the relationship between risk and return.
• Identify and demonstrate understanding of these types of risk: systematic, unsystematic, credit, foreign exchange, interest rate, market, political, and industry.
• Distinguish between individual asset risk and portfolio risk.
• Develop an understanding of diversification.
• Define beta and explain its impact on price.
• Demonstrate an understanding of the Capital Asset Pricing Model (CAPM).
• Calculate rates of return.
• Describe the term structure of interest, and explain why it changes over time.
• Demonstrate an understanding of duration as a measure of bond interest sensitivity.
• Identify and describe the basic features of bonds such as maturity, par value, coupon rate, provisions for redeeming, conversion, and covenants.
• Explain how income taxes impact financing decisions.
• Define equity and its role in a firm's capital structure, define and identify the characteristics of common and preferred stock, and discuss the differences of equity versus debt.
• Value common and preferred stock using discounted cash flow methods, including the constant growth dividend discount model and the two-stage dividend discount model.
• Demonstrate an understanding of comparable valuation methods, such as price/earnings ratio, market/book ratio and price/sales ratio.
• Define and identify characteristics of other sources of long-term financing including eases, convertible securities, and warrants.
• Define the cost of capital and articulate its use in capital investment decisions.
• Demonstrate an understanding of how income taxes impact capital structure and investment decisions.
• Explain the concept of optimal capital structure.
• Calculate the marginal cost of capital; explain its importance as opposed to historical cost.
• Demonstrate an understanding of derivatives and distinguish between long and short positions.
• Define options and distinguish between a call and a put option.
• Define exercise price, strike price, option premium and intrinsic value.
• Identify and describe the basic features of futures and forwards.
• Identify the characteristics of different types of financial markets and exchanges.
• Demonstrate an understanding of the role of investment banks.
• Define Initial Public Offering (IPO) and secondary offerings.
• Demonstrate an understanding of market efficiency.
• Define cash dividends, stock dividends, and stock splits.
• Identify the factors that influence the dividend policy.
• Demonstrate an understanding of the dividend payment process.
• Define share repurchases and explain the factors that cause a firm to repurchase its stock.
• Define working capital and identify its components.
• Explain the benefit of short-term financial forecasts in the management of working capital.
• Identify factors influencing the levels of cash, and explain the three motives for holding cash.
• Prepare forecasts of future cash flows.
• Demonstrate an understanding of float, identify methods of speeding up cash collections, calculate the net benefit of a lockbox system, and define concentration banking.
• Identify marketable securities and describe the reasons for holding them.
• Define the different types of marketable securities.
• Evaluate the trade-offs among the variables in marketable security selections, including safety, marketability, yield, maturity, and taxability.
• Identify reasons for carrying accounts receivable and the factors influencing the level of receivables.
• Define default risk.
• Demonstrate an understanding of receivables factoring.

Level
Overview

Instructional Method
Self-Study

NASBA Field of Study
Finance (10 hours)

Program Prerequisites
None

Advance Preparation
None