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Why the GMAT Anyway?

The Graduate Management Admission Test, or GMAT, is a standardized, computer-based test that is used by over 5,400 programs in more than 1,500 universities around the world as part of the selection process for their programs. Many business schools use the GMAT as an entrance examination for MBA programs. Business schools also use the test for other degree programs, including master’s in accounting and finance.

The GMAT has been shown to have some degree of validity in determining who is most likely to do well in MBA classes, especially those in the first year. Data shows that on a scale from 0.00 to 1.00, the GMAT has a score of 0.48 as far as predicting grades in the first year of an MBA program. So, the GMAT has a good, but not perfect, ability to predict success in business school.

The GMAT also is fairly adept at predicting the incomes of business school graduates. For example, students with higher GMAT scores tend to earn higher salaries both right after graduation, and after five years.

The GMAT has changed a great deal over the years, and other changes also are underway. For example, some universities are beginning to drop the GMAT requirement for entrance into some programs, including the MBA (see more on this below).


The GMAT dates to 1953, when what is now called the Graduate Management Admission Council (GMAC) formed an association of what was then nine business schools. The purpose was to come up with a standardized test that would help business schools to select the most qualified students. In the first year the test was given, the GMAT was taken by about 2,000 students. In modern times, it is taken about 250,000 times per year. It was used initially for about 54 different universities and now is used by 1500.


The GMAT has four parts detailed below.


This section tests your ability to reason quantitatively. You will be required to solve quantitative problems, interpret data on graphs, and more. You need to have a good knowledge of basic arithmetic, algebra and geometry. The problems in this section include data sufficiency and problem solving. Problem solving questions gauge your ability to both reason quantitatively and to solve complex quantitative problems. Data sufficiency questions measure how well you can analyze a quantitative problem and come up with the best solution.

This part of the GMAT is given by computer.


This section measures how well you can read and comprehend written text. You also will need to reason, evaluate complicated arguments, and correct written matter so that ideas are expressed in clear English. Some of the question types are reading comprehension, critical reasoning and sentence correction. The reading comprehension sections can be as long as 350 words. Some of the most common subjects are social sciences, sciences, and business areas such as human resources, marketing, and economics.

This part of the GMAT is given by computer.

Integrated Reasoning

This is a new GMAT section that measures how well you can evaluate data that is presented in different formats from different sources. The skills that are being measured in this new section were recently identified in a survey of more than 700 management faculty around the world as very important for new business school students.  This section has 12 questions in four formats. These include graphics interpretation, two part analysis, table analysis and multi source reasoning.


This section has a 30 minute writing assignment where you must analyze an argument. You need to be able to provide an analysis of the reasoning of an argument and write a critique of it. The essay has two different ratings, and one of them can be done with an essay-scoring engine, and the other is by a human reader. If the two scores vary by more than one point, another evaluation by a human expert is done.

The total score on the GMAT ranges from 200-800 points. About 70% of test takers score between 400-600.

Phasing Out of GMAT Requirement

As mentioned earlier, some universities, including some well-established on campus programs, such as New York University-Stern, no longer require the GMAT test for entry into MBA school. Also, many excellent online MBA programs are no longer requiring the GMAT, such as the University of Cincinnati. The reasons for this are complex. As noted earlier, the test has a solid but not perfect record in determining who is likely to be most successful in business school. Some schools, such as NYU Stern, have determined that the test simply does not predict well enough who will succeed in graduate school and who will not.

Not having to take the GMAT has many advantages. You will not have to worry about preparing for the test, purchasing books or tutoring services, or the stress of taking the test. Taking the GMAT costs about $250, as well.

Taking the GMAT is still necessary for some business schools, particularly the top tier programs at Harvard, Yale, Stanford and others. But many schools are beginning to waive this requirement.

You should be sure when you are applying to business school to determine if GMAT scores are required, and if so, what sort of score you need to have. Keep in mind that the GMAT score is just one of many criteria that admissions offices use to determine whether you should be admitted to the university or not.

Zach Gary, Editor

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