US CMA Cheatsheet

Cheatsheet Content

External Financial Reporting Financial Statements Income statement Balance sheet Statement of cash flows Statement of changes in equity Revenue Recognition Revenues recognized when earned Some contracts use percentage-of-completion Inventory FIFO (first-in, first-out) LIFO (last-in-first-out) Weighted average Cost of Goods Sold (COGS) COGS: Beginning inventory + Purchases - Ending Inventory Standard Costing Standard cost set benchmark Favorable variances: Actual Unfavorable variances: Actual > Standard Ratio Analysis Current ratio: Current assets / Current liabilities Gross profit margin: (Sales - COGS) / Sales ROA (return on assets): Net Income / Total Assets Debt ratio: Total liabilities / Total assets Planning, Budgeting, and Forecasting Strategic Planning Long-term, sets mission, goals, and objectives Budgeting Quantitative plan for an entity Budgeting Methods Incremental: Prior year's budget as baseline Zero-based: Each expense must be justified Flexible: Adjusts to changes in volume Budgeting Techniques Master budget: Overall financial plan for a period Operating budget: Sales, production, and operating expense budgets Financial budget: Capital expenditures, cash, and balance sheet Types of Budgets Operating budget Capital budget Making predictions under uncertainty Quantitative Methods Regression analysis: $Y = a + bx$ Moving averages Learning curve analysis: $Y = aX^b$ KPI (Key Performance Index) Helps measure achievement of goals Can include both financial and non-financial measures Can be leading or lagging indicators Responsibility Centers Cost center: Responsible for costs only Profit center: Responsible for revenues and costs Investment center: Responsible for investments, revenues, and costs Balanced Scorecard Performance measurement system that links strategies to operational objectives