Free IMA CMA Part 2 (Strategic Financial Management) Financial Statement Analysis Practice Questions

Financial Statement Analysis on CMA Part 2 covers ratio analysis (liquidity, leverage, activity, profitability, market), DuPont decomposition, common-size statements, trend analysis, off-balance-sheet financing, and fair value adjustments. Ratio computation and interpretation is a constant Part 2 topic at 20% of the exam.

116 questions 46 easy 47 medium 23 hard 2026 syllabus

Sample Questions

Question 1 Easy
A company has sales of $1,000,000 and cost of goods sold of $600,000. What is the gross profit margin?
Solution
B is correct. Gross profit equals sales minus COGS: $1,000,000−$600,000=$400,000\$1{,}000{,}000 - \$600{,}000 = \$400{,}000. Gross profit margin equals gross profit divided by sales: $400,000/$1,000,000=0.40\$400{,}000 / \$1{,}000{,}000 = 0.40, or 40%.
Question 2 Medium
A company's income statement shows net income of $180,000, income tax expense of $60,000, and interest expense of $40,000. What is the company's times-interest-earned (TIE) ratio?
Solution
A is correct.

Times-interest-earned (TIE) ratio = EBIT / interest expense, where EBIT adds interest and taxes back to net income.

| Item | Amount | Why |
|---|---|---|
| Net income | $180,000 | Starting point |
| Interest expense | +$40,000 | Add back to reach EBIT |
| Tax expense | +$60,000 | Add back to reach EBIT |
| EBIT | $280,000 | Numerator |
| Interest expense | $40,000 | Denominator |
| **TIE ratio** | **7.0 times** | $280,000 / $40,000 |
Question 3 Hard
A company reports net income of $90,000, total equity of $600,000, and paid dividends of $36,000 during the year. Assuming the company maintains its current capital structure and profit margins, what is the maximum sustainable growth rate?
Solution
C is correct. The sustainable growth rate (SGR) equals ROE multiplied by the retention ratio. Step 1: ROE = 90,000/600,000=15%90{,}000 / 600{,}000 = 15\%. Step 2: Dividend payout ratio = 36,000/90,000=40%36{,}000 / 90{,}000 = 40\%. Step 3: Retention ratio = 1−0.40=0.601 - 0.40 = 0.60. Step 4: SGR = 0.15×0.60=0.090.15 \times 0.60 = 0.09, or 9.0%.
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