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CMA Part 2 Practice Questions: Cases, Calculations, and Rationale

Updated 8 min read
Key takeaway

These original practice questions use CMA Part 2 concepts without reproducing secure exam content.

  • Work each problem before reading the explanation.
  • The current English exam has 100 MCQs in three hours followed by two case-based sets in one hour, so practice both concise decisions and multi-step analysis.
On this page9 sections
  1. How to use this set
  2. Question 1: analyze the quality of reported growth
  3. Question 2: special order with and without constrained capacity
  4. Question 3: NPV and a decision constraint
  5. Question 4: ethical reporting pressure
  6. Extend the questions into a case session
  7. Review method and next steps
  8. Use the answers as an error-diagnosis tool
  9. One way to build a short case from this set

How to use this set

Try the questions without notes, mark any guess, and write down the reason for your choice. A correct guess still deserves review. For each explanation, identify the decisive fact and explain why the nearest distractor fails. These items are original study exercises, not official IMA questions and not a promise that the live exam uses identical wording or interface.

Part 2 assesses six domains. This set emphasizes financial statement analysis, business decision analysis, capital investment, and ethics. It is not a complete syllabus test. Use missed items to choose what to review, then practice additional corporate finance, enterprise risk, and professional ethics questions.

Question 1: analyze the quality of reported growth

Question 1: analyze the quality of reported growth

A distributor reports revenue growth of 18% this year. Accounts receivable increased 32%, inventory increased 27%, and operating cash flow fell from positive $4.2 million to negative $1.1 million. Management says the decline reflects a major customer contract launched late in the year. No additional collection or contract facts are provided. Which is the best conclusion?

  1. The revenue growth is fictitious because receivables grew faster than sales.
  2. The growth warrants investigation because receivables and inventory rose faster than sales while operating cash flow declined, but the facts do not prove misstatement.
  3. The company improved earnings quality because the new contract increased revenue.
  4. The cash-flow decline is irrelevant because revenue is the primary performance measure.
Answer: B. Answer: B. The combined trends are warning signals. Receivables growing materially faster than revenue may indicate slower collection, extended terms, or recognition timing; inventory growth can suggest stock accumulation or anticipated demand. The cash-flow reversal makes the working-capital effect important. Yet the question gives a plausible contract timing explanation and no evidence of improper recognition, so calling the revenue fictitious overstates what is known. A is too conclusive: unusual trends require analysis, not an accusation without evidence. C treats revenue growth as proof of quality and ignores conversion to cash. D dismisses the cash-flow statement, which is central to assessing whether reported growth is supported by cash generation. A strong analyst would examine aging, contract terms, subsequent collections, inventory turns, returns, and the cash-flow bridge before advising management.

Question 2: special order with and without constrained capacity

Question 2: special order with and without constrained capacity

A manufacturer has capacity for 10,000 units and expects to sell 8,000 at $50 each. Variable cost is $31 per unit. A customer offers to buy 1,500 units for $38 each. The order requires a one-time packaging cost of $2,000. It will not affect regular sales, and capacity is sufficient. What is the short-run incremental operating benefit?

  1. $8,500
  2. $10,500
  3. $12,500
  4. A loss of $2,000
Answer: A. Answer: A. Incremental revenue is 1,500 × $38 = $57,000. Incremental variable cost is 1,500 × $31 = $46,500. Subtract the $2,000 packaging cost: $57,000 − $46,500 − $2,000 = $8,500 benefit. Because capacity is available and regular sales are unaffected, there is no displaced contribution in the stated facts. B omits the packaging cost. C incorrectly compares the order price with the regular $50 selling price instead of evaluating incremental revenue and cost. D counts the one-time cost but ignores order contribution. If the factory were at capacity and the order displaced regular sales, the lost contribution would be an opportunity cost and could change the decision. The question expressly removes that condition.

Question 3: NPV and a decision constraint

Question 3: NPV and a decision constraint

A company is considering a machine costing $120,000. It will generate net cash inflows of $50,000 at each year-end for three years. The discount rate is 10%. The present value factor for an ordinary annuity of three years at 10% is 2.4869. There is no salvage value or working-capital investment. What is the project NPV, approximately?

  1. Negative $4,345
  2. Positive $4,345
  3. Positive $30,000
  4. Positive $120,000
Answer: B. Answer: B. Present value of the inflows is $50,000 × 2.4869 = $124,345. Subtract the $120,000 initial investment to get positive NPV of approximately $4,345. A reverses the sign. C uses undiscounted inflows and does not apply the present-value factor. D reports the initial investment instead of the project value. Under the stated assumptions the project creates value at a 10% required return; management should still validate the forecast and any resource constraints.

Question 4: ethical reporting pressure

Question 4: ethical reporting pressure

A division controller discovers that a forecast includes a large cost reduction from a vendor negotiation that has not been approved and has no signed agreement. The CFO asks the controller to leave it in the forecast because the board expects a margin target. What is the best first response?

  1. Keep the forecast unchanged because forecasts are inherently uncertain.
  2. Remove or clearly qualify the unsupported assumption, document the basis, discuss the concern with the CFO, and use the appropriate escalation process if the pressure continues.
  3. Send the forecast and the CFO’s request to all employees immediately.
  4. resign from the job before asking any questions.
Answer: B. Answer: B. The forecast should represent supportable assumptions and communicate uncertainty honestly. The controller should verify the facts, document the unsupported amount, explain the reporting concern, and follow internal escalation procedures if asked to mislead users. Confidentiality does not mean silently producing unreliable information; nor does it permit broad disclosure to people without a business need. A confuses uncertainty with permission to include an unsupported benefit. C breaches confidentiality and is disproportionate. D skips ordinary professional steps and does not correct the reporting problem. The exact escalation route depends on company policy, but the core duties are competence, integrity, and credible communication.

Extend the questions into a case session

For a case-based practice session, assemble a short fictional company packet with an income statement trend, balance sheet balances, operating cash flows, a proposed equipment purchase, and one risk or ethics fact. Give yourself a fixed time and answer only the stated requirements. For example, calculate one ratio, explain a trend, compare an investment, and recommend one control. This builds the habit of moving between data and decisions.

A disciplined answer uses facts, not a memorized speech. State the calculation, interpret it in the business context, identify a limitation, and make a recommendation that fits the objective. When a fact is missing, say what evidence would resolve the uncertainty rather than inventing it. This is especially useful in cases where more than one option appears financially attractive.

Review method and next steps

After scoring, classify each error. A formula error calls for retrieval practice; an input error calls for careful reading; a conceptual error calls for review and fresh examples; a judgment error calls for comparing the alternatives to the stated objective. Record guessed answers separately, because a correct guess is not yet dependable knowledge.

Then complete new questions from the weaker domains and revisit this set after a delay. If you remembered the answer but cannot reconstruct the reasoning, the concept has not become reliable. The aim is transferable analysis: find relevant facts, apply the correct method, check the result, and explain the choice clearly.

Use the answers as an error-diagnosis tool

For Question 1, the decisive move is to combine three signals but stop short of alleging misconduct. The trend is concerning because receivables and inventory rise faster than sales while operating cash reverses. A strong next step tests collection and inventory support. Candidates who chose a categorical accusation should practice separating an indicator from proof.

For Question 2, the first calculation is contribution per unit on the special order, then the one-time cost: ($38 − $31) × 1,500 − $2,000 = $8,500. The given spare capacity matters because it removes displaced regular contribution. Change that fact and the correct analysis changes. This is an example of why candidates should circle constraints and assumptions before choosing a formula.

For Question 3, the annuity present value is $124,345, and deducting the initial $120,000 gives a positive $4,345 NPV. A reliable habit is to state the sign in words before choosing an option: positive present value less investment means value added at the required return. If a question contains a positive NPV, a negative answer may be a sign error rather than a conceptual issue.

For Question 4, the CFO’s desired result does not make an unapproved cost reduction supportable. The controller should seek evidence, communicate the forecast limitation, and follow escalation procedures. Publicly distributing the request is not a proportionate first step and can violate confidentiality. Ethical questions often test both the duty and a professional way to respond.

One way to build a short case from this set

Combine the first three questions into a fictional board briefing: assess the reliability of growth, determine whether the special order uses available capacity profitably, and evaluate a machine investment. Add the ethics question as a control over forecast assumptions. Write a concise recommendation that states the calculation, key risk, and next information needed. This exercise tests integration rather than memorizing the answer letters.

For a calculation, estimate the expected direction before using a calculator, then verify the arithmetic and units. For a recommendation, connect the answer to the company objective and stated constraints. These checks catch both numerical slips and technically correct answers that do not address the decision.

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