Financial Statement Analysis: CMA Exam 2 - Section A

Author: Tom Coghlan

Whether you take the CMA exam or not, this course will equip you with the skills to prepare and analyze financial statements, calculate growth, and more.

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

• Basic financial statement analysis
• Financial ratios
• Profitability analysis
• Special issues including foreign currency, off-balance sheet items, and earnings quality.

Learning Objectives

• Prepare and analyze common size Income Statements and Balance Sheets (vertical analysis).
• Calculate growth of key items on base year Income Statements and Balance Sheets (horizontal analysis).
• Calculate current assets, current liabilities and working capital.
• Analyze working capital using the current ratio, quick (acid test) ratio, cash ratio, cash flow ratio, and net working capital ratio.
• Define solvency, leverage, and capital structure.
• Calculate and interpret the following ratios: debt to equity, long-term debt to equity, debt to total asset, interest coverage (times interest earned), fixed charge coverage (earnings to fixed charges), ash flow to fixed charges.
• Define and calculate operating leverage and financial leverage.
• Calculate and interpret accounts receivable turnover, inventory turnover and accounts payables turnover.
• Calculate and interpret days sales outstanding in receivables, days sales in inventory, and days purchases in accounts payable.
• Define and calculate the cash and operating cycles.
• Calculate and interpret fixed asset turnover and total asset turnover.
• Calculate and interpret gross profit margin percentage, operating profit margin percentage, net profit margin percentage, return on assets, and return on equity.
• Calculate and interpret market and book value per share, price/earnings ratio, basic and diluted earnings per share, earnings yield, dividend yield, and dividend payout ratio.
• Identify accounting differences between foreign currency translations and foreign currency transactions.
• Define functional currency and reporting currency.
• Identify issues in the accounting for foreign operations including historical vs. current rates, and treatment of translation gains and losses.
• Define and explain off-balance sheet financing, and identify and describe operating leases; sale of receivables; special purpose entities; joint ventures.
• Explain why companies use off-balance sheet financing, and explain impact of off-balance sheet financing on the debt-to-equity ratio.
• Identify the determinants and limitations of earnings quality.
• Identify the limitations of ratio analysis.

Level
Overview

Instructional Method
Self-Study

NASBA Field of Study
Finance (6 hours)

Program Prerequisites
None

Advance Preparation
None