Cima Verb Level Hierarchy

CIMA verb hierarchy strategic level examsChapter learning objectives

CIMA VERB HIERARCHY

CIMA place great importance on the choice of verbs in exam question requirements. It is thus critical that you answer the question according to the definition of the verb used.

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1 CIMA verb hierarchy strategic level

In strategic level exams you will mainly meet verbs from levels 3, 4 and 5. Examiners have commented on many occasions that they ask a level 5 verb and get a level 2 response. It is vital that the higher level verbs are understood and responded to. Very occasionally you will also see level 1 and 2 verbs but these should not account for more than 510% of the marks in total.

Level 3 APPLICATION

How you are expected to apply your knowledge

VERBS USED

DEFINITION

Apply

Calculate

Demonstrate

Prepare

Reconcile

Solve

Tabulate

Put to practical use.

Ascertain or reckon mathematically.

Prove with certainty or exhibit by practical means.

Make or get ready for use.

Make or prove consistent/compatible.

Find an answer to.

Arrange in a table.

CIMA verb hierarchy - strategic level exams

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Level 4 ANALYSIS

How you are expected to analyse the detail of what you have learned.

Level 5 EVALUATION

How you are expected to use your learning to evaluate, make decisions or recommendations.

VERBS USED

DEFINITION

Analyse

Categorise

Compare and contrast

Construct

Discuss

Interpret

Prioritise

Produce

Examine in detail the structure of.

Place into a defined class or division.

Show the similarities and/or differences between.

Build up or compile.

Examine in detail by argument.

Translate into intelligible or familiar terms.

Place in order of priority or sequence for action.

Create or bring into existence.

VERBS USED

DEFINITION

Advise

Evaluate

Recommend

Counsel, inform or notify.

Appraise or assess the value of.

Propose a course of action.

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2 Further guidance on strategic level verbs that cause confusion

Verbs that cause students most confusion at this level are as follows:

Level 3 verbs

Given that all level 3 verbs involve application, the verb "apply" is rare in the real exam. Instead one of the other more specific verbs is used instead.

This is a numerical requirement and usually involves starting with one of the figures, adjusting it and ending up with the other.

For example, in a bank reconciliation you start with the recorded cash at bank figure, adjust it for unpresented cheques, etc, and (hopefully!) end up with the stated balance in the cash "T account".

The verb "to demonstrate" can be used in two main ways.

Firstly it could mean to prove that a given statement is true or consistent with circumstances given. For example, the Finance Director may have stated in the question that the company will not exceed its overdraft limit in the next six months. The requirement then asks you to demonstrate that the Director is wrong. You could do this by preparing a cash flow forecast for the next six months.

Secondly you could be asked to demonstrate how a stated model, framework, technique or theory could be used in the particular scenario to achieve a specific result for example, how a probability matrix could be used to make a production decision. Ensure in such questions that you do not merely describe the model but use it to generate the desired outcome.

• The verb "to apply"

• The verb "to reconcile"

• The verb "to demonstrate"


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Level 4 verbs

To analyse something is to examine it in detail in order to discover its meaning or essential features. This will usually involve breaking the scenario down and looking at the fine detail, possibly with additional calculations, and then stepping back to see the bigger picture to identify any themes to support conclusions.

For example, if asked to analyse a set of financial statements, then the end result will be a set of statements about the performance of the business with supporting evidence. This could involve the following:

The main error students make is that they fail to draw out any themes and conclusions and simply present the marker with a collection of uninterpreted, unexplained facts and figures.

To discuss something is very similar to analysing it, except that discussion usually involves two or more different viewpoints or arguments as the context, rather than a set of figures, say. To discuss viewpoints will involve looking at their underlying arguments, examining them critically, trying to assess whether one argument is more persuasive than the other and then seeking to reach a conclusion.

For example, if asked to discuss whether a particular technique could be used by a company, you would examine the arguments for and against, making reference to the specific circumstances in the question, and seek to conclude.

• The verb "to analyse"

(1) You could break down your analysis into areas of profitability, liquidity, gearing and so on.

(2) Under each heading look at key figures in the financial statements, identifying trends (e.g. sales growth) and calculating supporting ratios (e.g. margins).

(3) Try to explain what the figures mean and why they have occurred (e.g. why has the operating margin fallen?)

(4) Start considering the bigger picture are the ratios presenting a consistent message or do they contradict each other? Can you identify common causes?

(5) Finally you would then seek to pull all this information together and interpret it to make some higher level comments about overall performance.

• The verb "to discuss"

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To prioritise is to place objects in an order. The key issue here is to decide upon the criteria to use to perform the ordering. For example, prioritising the external threats facing a firm could be done by considering the scale of financial consequences, immediacy, implications for the underlying business model and so on.

The main mistake students make is that they fail to justify their prioritisation why is this the most important issue?

Level 5 verbs

To evaluate something is to assess it with a view to placing a value on it. In many respects "evaluate" should be seen as a higher level version of "analyse" and "discuss" and could include qualitative and quantitative factors within your criteria. Your resulting arguments will need to be prioritised and weighed against each other to form a conclusion.

For example, suppose you are asked to evaluate a proposed strategy in paper E3. At its simplest your answer could contain a series of arguments for and against the strategy. Each argument should be discussed to assess its importance. The arguments can then be weighed up against each other to form a conclusion. You are thus evaluating the factors within each argument and then evaluating the arguments against each other.

With such questions many students struggle to generate enough points or arguments. Part of the solution is to produce mental checklists when studying the paper concerned. These give criteria to use for valuing the matter at hand. With the above example on strategy evaluation, criteria could include any of the following:

• The verb "to prioritise"

• The verb "to evaluate"

– Are there any useful calculations e.g. NPV, impact on profit?

– Does the strategy resolve any major threats faced by the firm?

– Does the strategy capitalise on the firm's strengths or do weaknesses need resolving first?

– Does the strategy enhance the firm's competitive strategy?

– Does the strategy lead to a better "fit" with the environment?

– What are the risks and are they acceptable?

– What are the implications for different stakeholders and would it be acceptable to them?

– What are the resource implications how feasible is the strategy?


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Use of such a checklist will ensure you have enough points to pass.

In some questions you may have to do more preliminary work before you can evaluate. For example, if asked to evaluate a firm's approach to change management you would start by identifying what type of approach they are taking (referencing to different models of change management) before you can evaluate it.

All three level 5 verbs involve a mixture of identifying relevant issues, analysing them, evaluating them and then finishing with some form of conclusion. Some writers see this as a three step approach:

The difference between the level 5 verbs lies in where the main emphasis is in these three steps. With "advise" and "recommend" the examiner will be looking for more detail in step 3. Recommendations in particular could involve formulating a plan of action that includes both short and longer term aspects.

• The differences between the verbs "to evaluate", "to advise" and "to recommend"

(1) What? Identify relevant issues.

(2) So what? Why are the issues relevant? How significant are they?

(3) What now? What response is required by the firm being considered?

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Cima Verb Level Hierarchy

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