CMA Exam Risk Management

CMA Exam Risk Management

Many of you have been asking me what you can do to improve your chance of passing your CMA Exam. In this post I talk about risk management and what you can do to help ensure your success on the exam.

Start With Yourself

The first step of risk management starts with yourself. You must know why you are taking the CMA exam (or any professional exam). It can be for a raise, a better job, or because you want to learn the material (the exact reason does not matter). What matters is that you have a specific reason. Passing the exam requires a significant time commitment and if you do not know why you are doing it, you will find many reasons to not study. (See: The Only Question You Need to Answer to Pass the Exam)

Have a Plan

Second, you need to have a plan for studying and passing the exam. As the saying goes, “If you fail to plan, you plan to fail.” I cannot overemphasize this point—make a schedule so you know when you are studying and when you are not studying. (See: Exam Tip: Scheduling for Success and Peace of Mind)

Use Your Study Materials

Third, use your study materials. You cannot learn from your materials if you do not study them. This means that you not only read the textbook, but you study the examples and solve every practice question, both multiple-choice and essay. If you have flash cards, use them. We created flash cards for a reason—they are a very helpful study tool. Our videos are also very helpful and reduce the amount of time needed to study and make the study process a bit easier for most people.

Ask Questions

Fourth, ask questions! As you are studying, certain concepts will be unclear. When this happens, do not ask Google. The CMA exam has very specific content, and very little of what is on the Internet is specific for the CMA exam. A lot of what you find on Google will also be wrong information. You could also just “hope” that they do not ask about a particular topic on the exam, but this is very risky because you cannot predict what the specific topics your exam will cover. Your best option is to ask questions. Please, ask questions! At HOCK, we provide unlimited support to all candidates who purchase our materials because we want you to pass the exam. If the company that you bought materials from does not support you by answering questions, let them know that they should. 

Share the Risk With Another Party

Finally, you can share the risk with another party, which is what car, home, or health insurance do. You hope that you do not need to use the insurance, but if do, you’re very glad that you have it. You can do this for the CMA exam with HOCK’s “You Pass or We Pay” Guarantee. If you follow our program and do not pass the actual exam, HOCK will pay for you to retake the exam. You hope that you do not need to use it, but if you do, you will be very glad that you have it.

Brian Hock, CMA, CIA

 

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CMA Part 2 Textbook Update January 2021

The CMA Part 2 Textbook has been updated, and the new files are available for current students to download in My Studies.

This book reflects HOCK’s ongoing commitment to providing the most complete and understandable materials and is not due to a change in the syllabus.

Students who are taking the exams in January-February 2021 should continue to use their existing books to avoid any disruption so close to the end of their studies.

Students who are taking the exams after February 2021 are encouraged to switch to the new version to continue their studies. There is no need to re-study any topics already completed.

If you have any questions about these changes, please contact us and we will be glad to assist you.

You can also learn more about the HOCK CMA Textbooks and other exam prep materials if you are not already a HOCK student.

Blog: Making one into one billion

Making one into one billionA week ago, I wrote about how a small regular investment grows over time with compounding interest. A reader recently sent me an illustrative story about compounding that I want to share.

Once upon a time, there was a king who collected almost the entire rice crop harvested by his subjects as tax, promising to give it back during tough times. After many good years, there came a year when there was no crop. However, the King was stingy and unwilling to return the rice as promised. A clever girl did a favor to the king and then asked for a reward.

The reward that she asked for was that she would receive one grain of rice on the first day, and double that on the second day. On the third day, she would receive twice that from the second day. And so on for 30 days. The king thought that it was a modest request and granted it to the little girl.

However, when the King started to pay the reward, he realized what it would become.

On day 6, the little girl received 32 grains of rice.

On day 12, the little girl received 2,048 grains of rice.

On day 18, the little girl received 131,072 grains of rice.

On day 24, the little girl received 8,388,608 grains of rice.

On day 30, the little girl received 536,870,912 grains of rice.

After 30 days, she received a total of 1,073,741,823 grains of rice. (After I read this, I did the math in Excel to make certain that it is correct.)

As you can see, the increase from day to day gets larger the more days that the girl has been “investing.” While no investment offers 100% daily returns, the same concept applies to lower returns and longer periods of time.

I am certain that there are similar stories in many cultures. What version of this story have you heard?

Brian Hock, CMA, CIA

Blog: A Resolution for Generations

Resolution for Generations

It is only about two weeks into 2021 and I expect that many New Year’s resolutions have already been forgotten and abandoned. Whether it was to lose weight, study more, or quit smoking, many of us have probably already given up on our resolutions. Perhaps we’ve told ourselves that we will stick to them longer in 2022.

Instead of short-term resolutions that do not last very long, wouldn’t it be nice to have a resolution that could change not only your life, but also the life of the generations that follow you? I have made one such resolution this year, which is to leave a legacy that will allow my income to continue forever for generations following me. This is nothing more than a savings plan, but it is a savings plan that is not for me, but for my children, their children, their children, and so on. It is essentially a family endowment fund that will last for generations. The best news about this resolution is that it is not as difficult as you might think.

We are all familiar with the idea of saving for our retirement. Whether it is a government pension plan, a company plan, our own personal plan, or some combination of these, we are all aware that we are saving (or that we should be saving). Unfortunately, statistics show that many people do not have enough set aside for their own retirement, and now I am suggesting that people save for their great-great-grandchildren? Before dismissing this as impossible, let’s look at some numbers.

(A preface to the numbers: I know that people in different countries have different rates of return available to them. The US stock market has had an annualized compound annual growth rate of 7.47% from 1950 through 2013, and because I live in the US, these are the numbers that I have to work with.)

Let us assume for the purposes of this example a more conservative 6% annual return on investment. This means that in order to have your annual salary be the annual return of a retirement fund, you need to have 17 times your annual salary saved when you retire. If your annual salary is $40,000, then you will need $680,000 saved when you retire.

How do you get to $680,000? Any financial calculator will help you do the math, but if you have $0 saved now and you invest $131 a month for 50 years at 7%, you will have $683,798.19 after 50 years. Then, for every year after that, your children and grandchildren will have $40,000 of annual income, forever. The best part is that $131 a month is less than 4% of a $40,000 annual salary.

Now, let’s change the time frame and look at it from the standpoint of a gift that you can give your children starting when they are born. If you start saving $100 a month for a child when the child is born, that $100 a month at 6.2% for 65 years will be worth $1,005,114! With just $100 a month, your child can be a millionaire when they retire. If we are more optimistic (though perhaps somewhat unrealistic) and use a 9% return, then that same $100 a month will be worth $3,921,762 when your child is 65.

You can also use this plan to help teach your child about saving. If you put $100 a month away for 16 years at 7%, it will be $35,808 when your child turns 16. When your child gets their first part-time job, let’s say that they will start helping pay the $100 a month by paying $10 of it. After they finish college and get a job, you can have them contribute $25 a month, and as they get older increase the percent that they pay increases until they are paying all of it. They will have learned from an early age that saving is the best insurance for the future and will continue to make the payment. Then, when they turn 65, they will have $1.4 million, assuming a 7% average annual rate of return.

I understand that not everyone has access to a consistent 7% return, and that $100 per month may not be realistic in some economies. But also consider that in an economy where salaries are smaller, a smaller amount is needed to be able to generate your annual salary. As a percent, if you save 3% of your salary every month and invest it at 7.2%, you will have a principal that will generate your annual salary in 50 years. Or, at a 6.2% annual return of return, if you save 5% of your salary every month you will have a principal that will generate your annual salary in 50 years.

I invite you to use a financial calculator and play with the numbers. When you do the math, you too may decide to make a resolution that will last for generations.

Brian Hock, CMA, CIA

CMA Part 1 Textbook Update January 2021

The CMA Part 1 Textbook has been updated, and the new files are available for current students to download in My Studies.

This book reflects HOCK’s ongoing commitment to providing the most complete and understandable materials and is not due to a change in the syllabus.

Students who are taking the exams in January-February 2021 should continue to use their existing books to avoid any disruption so close to the end of their studies.

Students who are taking the exams after February 2021 are encouraged to switch to the new version to continue their studies. There is no need to re-study any topics already completed.

If you have any questions about these changes, please contact us and we will be glad to assist you.

You can also learn more about the HOCK CMA Textbooks and other exam prep materials if you are not already a HOCK student.

MCQ Study Tip – Making Educated Guess

How to Make a Good Guess Quickly

On the CMA and CIA Exams, it is important to answer every question, even if you have to guess. One of the reasons for this is because there is no penalty for an incorrect answer.

However, rather than just randomly guessing from the 4 choices, sometimes you can quickly narrow your choices down to three or even only two possibly correct answers. Having a 33% or 50% chance of guessing the answer correctly is better than 25%!

Watch the video to learn the words to keep in mind as you make a quick educated guess, and other tips from Brian Hock.

If you are already a CMA, CIA, or CPA Exam candidate, you may be interested in more study tips from the HOCK team. If you haven’t started studying yet, check out today’s deals and get unlimited access to the HOCK materials.

 

Multiple-Choice Questions – CMA and CIA Exam Advice

Brian Hock talks about the need to answer every question on the CMA and CIA Exams and the strategy to use for long and difficult questions.

Do you know how is the CMA and CIA Exam scores are determined? Learn everything you need to know!

CMA US vs CMA India – What Is the Difference?

CMA US vs CMA India - what is the difference

CMA US or CMA India - which one is better? Both CMA US and CMA India are professional accounting and finance certifications that can help you advance your career. Although there are many similarities between the two, let's take a look at the differences first. 

Designation

CMA US - Certified Management Accountant

CMA India - Cost Management Accountant

The Examining Body

Eligibility Requirements

CMA US - Bachelor's degree and two years of professional experience

CMA India - Class 12

Study Time

CMA US – 8-18 months

CMA India – 3 – 4 years

Recognition

CMA US – Global

CMA India – India only

Accounting Standards

CMA US – US GAAP and IFRS

CMA India – IND AS (Indian GAAP)

Now, let's take a closer look at the exams.

CMA US - 2 Exams

Part 1. Financial Planning, Performance, and Analytics

  • External Financial Reporting Decisions
  • Planning, Budgeting, and Forecasting
  • Performance Management
  • Cost Management
  • Internal Controls
  • Technology and Analytics

Part 2. Strategic Financial Management

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

CMA India - 20 Exams (Papers)

CMA Foundation

  • Paper 1: Fundamentals of Economics and Management
  • Paper 2: Fundamentals of Accounting
  • Paper 3: Fundamentals of Laws and Ethics
  • Paper 4: Fundamentals of Business Mathematics & Statistic

CMA Intermediate

  • Paper 5: Financial Accounting
  • Paper 6: Laws, Ethics and Governance
  • Paper 7: Direct Taxation
  • Paper 8: Cost accounting and financial management
  • Paper 9: Operation Management Information System
  • Paper 10: Cost and Management Accounting
  • Paper 11: Indirect Taxation
  • Paper 12: Company Accounts & Audit

CMA Final

  • Paper 13: Corporate Laws and Compliance
  • Paper 14: Advanced Financial Management
  • Paper 15: Business Strategy & Strategic Cost Management
  • Paper 16: Tax Management and Practice
  • Paper 17: Strategic Performance Management
  • Paper 18: Corporate Financial Reporting
  • Paper 19: Cost and Management Audit
  • Paper 20: Financial Analysis & Business Valuation

Analysis

As you can see, there are a lot of similarities in the topics tested in the exams. There are more exams in the CMA India certification, and it takes longer to become certified. The CMA India certification benefits are focused on IND AS (Indian GAAP) and knowledge of Indian Corporate Law, which means it can be more applicable for Indian residents and candidates working for Indian companies.

The CMA US certification benefits are global recognition, and it only takes 8-18 months to become certified. If you are planning to work outside of India or for an international company, the CMA US is definitely the preferred option. 

HOCK international offers the most comprehensive CMA US materials and unlimited teacher support. The HOCK CMA video lectures include English subtitles to make the study process easier for our non-native English-speaking candidates. The payment plan is available worldwide, has no interest rate, and makes the materials the most affordable on the market. Start studying today!

Slowly, and then all of a sudden!

Brian Hock talks about the idea of “slowly and then all of a sudden.” This expression is used to describe how someone falls asleep, and was used by Mark Twain to describe how he went bankrupt. Brian sees a lot of similarities between this idea and how CMA, CIA, and CPA students learn some of the exam topics.

In this video, Brian also shares his personal experience of sudden understanding with the statement of cash flows almost 25 years ago.

Read more blogs from Brian’s desk.