Prepare for success on part 2 of the 2022 CMA exam with this authoritative study guide

The Wiley CMA Exam Review 2022 Part 2 Study Guide: Strategic Financial Management is a comprehensive and accurate handbook designed to help you identify and master each of the competencies covered by the second part of the 2022 Certified Management Accountant exam.

It includes material on:

Financial Statement Analysis
Corporate Finance
Decision Analysis
Risk Management
Investment Decisions
Professional Ethics

Ideal for anyone preparing for the challenging CMA series of exams, the Wiley CMA Exam Review 2022 Part 2 Study Guide: Strategic Financial Management is also a perfect companion resource for early-career management accountants seeking a refresher on foundational topics they’re likely to encounter regularly at work.

Wiley empowers learners, researchers, universities, and corporations to achieve their goals in an ever-changing world. For over 200 years, Wiley has been helping people and organizations develop the skills and knowledge they need to succeed. Wiley develops digital education, learning, assessment, and certification solutions to help universities, businesses, and individuals move between education and employment and achieve their ambitions. By partnering with learned societies, we support researchers to communicate discoveries that make a difference. Our online scientific, technical, medical, and scholarly journals, books, and other digital content build on a 200-year heritage of quality publishing.

About the Instructors ix

About the Exam xi

Introduction xv

Section A: Financial Statement Analysis 1

Topic 1. Basic Financial Statement Analysis 2

Common-Size Financial Statement Analysis (Vertical Analysis) 2

Horizontal Financial Statement Analysis 9

Topic 2. Financial Ratios 13

Liquidity Ratios 13

Solvency Ratios 17

Operating Leverage and Financial Leverage 21

Efficiency Ratios 25

Topic 3. Profitability Analysis 29

Profitability—Use of Assets 29

Profitability—Vertical Analysis Revisited and Return Ratios 31

Profitability—Market Value Ratios 33

Profitability—EPS, Yields, and Shareholder Return 35

Limitations of Ratio Analysis 41

Sources of Financial Information and Their Use in Evaluating a Company’s Financial Strength 43

ROA and ROE—A Closer Look 47

Revenues and Its Relationship to Current Assets 51

Cost of Sales and the Different Profit Margins 53

Considerations when Measuring Income 55

Topic 4. Special Issues 57

Sales and Revenues—Important Considerations 57

Foreign Exchange Fluctuations 59

Inflation and the Financial Ratios 63

Changes in Accounting Treatment 65

Book vs. Market Value and Accounting vs. Economic Profit 67

Quality of Earnings 69

Section A Review Questions 71

Section B: Corporate Finance 75

Topic 1. Risk and Return 76

Calculating Return 76

Types of Risk 79

Capital Asset Pricing Model 81

Topic 2. Long-Term Financial Management 83

Term Structure of Interest Rates 83

Types of Financial Instruments: Bonds 85

Types of Financial Instruments: Stock 89

Other Financial Instruments 91

Taxes and Capital Structure 97

Cost of Capital 99

Valuation of Financial Instruments: Valuing Debt and Equity 103

Valuation of Financial Instruments: Valuing Options 107

Topic 3. Raising Capital 109

Financial Markets and Regulation 109

Market Efficiency 111

Financial Institutions 113

Initial and Secondary Public Offerings 115

Dividend Policy and Share Repurchases 117

Topic 4. Working Capital Management 119

Working Capital Terminology 119

Cash Management 121

Marketable Securities Management 125

Accounts Receivable Management 129

Inventory Management 131

Types of Short-Term Credit 135

Short-Term Credit Management 137

Topic 5. Corporate Restructuring 141

Mergers and Acquisitions 141

Restructuring and Combining 143

Evaluating Business Combinations 145

Topic 6. International Finance 147

Fixed, Flexible, and Floating Exchange Rates 147

Managing Transaction Exposure 149

Financing International Trade 151

Section B Review Questions 153

Section C: Decision Analysis 157

Topic 1. CVP Analysis 158

Cost Behavior 158

Contribution Margin 161

Targeted Profit and Taxes 167

Multiple Products C-V-P 171

Risk and Uncertainty 175

Topic 2. Marginal Analysis 179

Defining Relevant Costs 179

Sunk Costs, Opportunity Costs, and Capacity 181

Marginal Analysis and Product Line Decisions 185

Practice Problems 191

Comprehensive Problems with Opportunity Costs 193

Topic 3. Pricing 195

Pricing Methods 195

Cost-Based Pricing 197

Competition-Based Pricing 201

Customer-Based Pricing 209

Pricing Strategy and the Product Life Cycle 213

Section C Review Questions 217

Section D: Risk Management 221

Enterprise Risk 222

Types of Enterprise Risk 222

Risk Identification and Assessment: Enterprise Risk Management 225

Risk Identification and Assessment: Risk Assessment Tools 229

Use of Probabilities 231

Risk Mitigation Strategies 233

Managing Risk 235

Section D Review Questions 237

Section E: Investment Decisions 241

Topic 1. Capital Budgeting Process 242

Introducing the Capital Budgeting Process 242

Cash Flows and Profits in the Capital Budgeting Process 247

Risk Analysis and Qualitative Issues in Capital Budgeting 251

Topic 2. Discounted Cash Flow Analysis 257

NPV and IRR Computations 257

Comparing NPV and IRR Methods with Uneven Cash Flows 263

The Payback Method 269

Section E Review Questions 275

Section F: Professional Ethics 279

Topic 1. Business Ethics 280

Moral Philosophies and Ethical Decision Making 280

Topic 2. Ethical Considerations for Management Accounting, Financial Management Professionals 285

Principles and Standards of Professional Ethics 285

Controlling Fraud and Resolving Ethical Issues 291

Topic 3. Ethical Considerations for the Organization 295

Ethics in an International Environment 295

Ethics and the Organization 301

Ethics and HR Management 305

Section F Review Questions 311

Review Questions and Answers 315

Appendixes 351

ICMA Content Specification Outlines 351

ICMA Learning Outcome Statements 359

Time-Value of Money Tables 373

Essay Tips 379

CMA Exam Ratio Definitions 381

Index 385

What is included with this book?

The New copy of this book will include any supplemental materials advertised. Please check the title of the book to determine if it should include any access cards, study guides, lab manuals, CDs, etc.

The Used, Rental and eBook copies of this book are not guaranteed to include any supplemental materials. Typically, only the book itself is included. This is true even if the title states it includes any access cards, study guides, lab manuals, CDs, etc.