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US CMA | CMA USA Part II Investment Decisions subject details

US CMA | CMA USA Part II Investment Decisions

US CMA | CMA USA Part II Investment Decisions-Before going into that lets know a little bit about CA USA Course syllabus.-US CMA | CMA USA Part II Financial Statement Analysis-Founded in 1887, the AICPA represents the CPA profession nationally regarding rule-making and standard-setting, and serves as an advocate before legislative bodies, public interest groups and other professional organizations. The AICPA develops standards for audits of private companies and other services by CPAs; provides educational guidance materials to its members; develops and grades the Uniform CPA Examination; and monitors and enforces compliance with the profession’s technical and ethical standards.

 The AICPA’s founding established accountancy as a profession distinguished by rigorous educational requirements, high professional standards, a strict code of professional ethics, a licensing status and a commitment to serving the public interest.

Investment Decisions has 15% of weight in the whole syllabus

US CMA | CMA USA Part II Investment Decisions

The below topics are to be followed for effective preparation in level C:

Cash flow estimates; discounted cash flow concepts; net present value; internal rate of return, discounted payback; payback; income tax implications for investment decisions; risk analysis; and real options.

Suggested Reading List is listed as follows:

  1. Brealey, Richard, A., Myers, Stewart C., and Allen, Franklin, Principles of Corporate Finance, 10th edition, McGraw Hill, New York, NY, 2011.
  2. Van Horn, James, C., and Wachowicz, John M. Jr., Fundamentals of Financial Management, 13th edition, FT / Prentice Hall, Harlow, England, 2009.

The following are the Content Specification Outlines

1. Capital budgeting process

Capital budgeting, or investment appraisal, is the planning process used to determine whether an organization’s long term investments such as new machinery, replacement of machinery, new plants, new products, and research development projects are worth the funding of cash through the firm’s capitalization structure (debt, equity or retained earnings). It is the process of allocating resources for major capital, or investment, expenditures.One of the primary goals of capital budgeting investments is to increase the value of the firm to the shareholders.

a. Stages of capital budgeting

b. Incremental cash flows

c. Income tax considerations

2. Discounted cash flow analysis

In finance, discounted cash flow (DCF) analysis is a method of valuing a project, company, or asset using the concepts of the time value of money. All future cash flows are estimated and discounted by using cost of capital to give their present values (PVs). The sum of all future cash flows, both incoming and outgoing, is the net present value (NPV), which is taken as the value of the cash flows in question.

a. Net present value

b. Internal rate of return

c. Comparison of NPV and IRR

3. Payback and discounted payback

When using the discounted payback period for decision making, a firm must first determine a discount rate at which to discount the future cash flow values of a specified period of time.

a. Uses of payback method

b. Limitations of payback method

c. Discounted payback

4. Risk analysis in capital investment

In finance, the benefit from investment is called a return. The return may consist of capital gain or investment income, including dividends, interest, rental income etc., or a combination of the two. The projected economic return is the appropriately discounted value of the future returns. The historic return comprises the actual capital gain (or loss) or income (or both) over a period of time.Investment generally results in acquiring an asset, also called an investment. If the asset is available at a price worth investing, it is normally expected either to generate income, or to appreciate in value, so that it can be sold at a higher price (or both).

a. Sensitivity and scenario analysis

b. Real options

US CMA | CMA USA Part II Investment Decisions

CMA EXAM

RATIO DEFINITIONS

Following are some of the useful abbreviations

  • EBIT = Earnings before interest and taxes
  • EBITDA = Earnings before interest, taxes, depreciation and amortization
  • EBT = Earnings before taxes
  • EPS = Earnings per share
  • ROA = Return on assets
  • ROE = Return on equity

US CMA | CMA USA Part II Decision Analysis

US CMA | CMA USA Part II Investment Decisions-US CMA | CMA USA Subject wise Weightage : Once you have received authorization from ICMA, it is your responsibility to schedule your appointment at a Prometric Testing Center. Log onto www.prometric.com/ICMA to locate a testing center, schedule, confirm, reschedule, or cancel your appointment 24 hours, 7 days a week. Instructions are provided by ICMA at the time your authorization letter is emailed that provides further options for scheduling. ICMA is not responsible if you delay scheduling and there are no longer appointments available within your authorization period. You will be given a confirmation number at the time you schedule an appointment; you should make a note of this number. If you do not schedule an appointment or you don’t appear for a schedule appointment in the selected testing window, you will forfeit your exam fee.

The CMA examination is given in a computer-based format, and is offered at Prometric Testing Centers located throughout the world. An up-to-date listing of all Prometric Testing Centers can be found at Prometric’s website. www.prometric.com/ICMA. Parts 1 and 2 are offered during the following three testing windows. January/February May/June September/October Registrations for Parts 1 and 2 will close on or after the 15th of February, June, and October. Register for the exam: 1. On-line at the online store. 2. Calling 800-638-4427, or (201) 573-9000 with your credit card information.

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