What You Must Know on Bond Valuation and Yield to Maturity
One of key financial management skills is valuing bond. We share to you the key concepts in bond valuation and yield to maturity.
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ACCA FM (Financial Management)
Guides, Practices & Mock Exams
ACCA FM (Financial Management) is one of paper in Applied Skills Module. They syllabus states its aim is to develop students’ knowledge and skills, relevant to investment, financing and dividend policy decisions, to qualify as a finance manager.
There is no significant change in the syllabus for Financial Management. Past paper questions seen in last year are still very good in preparing the exam.
In examiner’s report, many students cannot pass the exam because they are lack of understanding of the whole syllabus. You should keep in mind that covering the whole syllabus is important for ACCA Financial Management.
In this section, we share with you on study text, online courses, past papers questions review, technical articles and mock exam to help you to pass the exam.
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Exam Structure
All questions are compulsory. The exam will contain both computational and discursive elements. Some questions will adopt a scenario/case study approach.
Computer-Based Exam (CBE)
CBE time allowed is 3 hours. The extra 10 minutes are given to students to read exam instructions before the exam.
Section A
Objective Test Questions
Section A of CBE includes 15 objective test questions of 2 marks each plus additional content as described below^.
Section B
Case Base Objective Test Questions
Section B of CBE comprises 3 cases and each case includes 5 objective test questions of 2 marks each plus additional content as described below^.
Section C
Constructed Response Questions
Section C of CBE comprises TWO 20-mark constructed response questions. These TWO questions mainly come from working capital management, investment appraisal and business finance areas of the syllabus.
You are provided with a formulae sheet and tables of discount and annuity factors.
Syllabus
From the information provided by ACCA, some knowledge learnt from Management Accounting (MA) paper should bring forward to Financial Management, such as ratio analysis.
More important for you to know is ACCA FM is the cornerstone of ACCA AFM (Advanced Financial Management). An in-depth knowledge and understanding of investment appraisal, business valuation and risk management will be seen in AFM exam.
If you aim to pursue your career in commercial financial management, the knowledge learnt from ACCA FM and ACCA AFM are suitable.
There are 8 sections in the syllabus, which are –
A Financial Management Function
Understand the key elements of financial management function, conflict between financial objectives and non-financial objectives, agency theory and not-for-profit organization objectives
B Financial Management Environment
You are expected to know the economic environment impact on business, such as government policy, regulations and competition rules. Next, nature and role of financial markets and institutions, and the nature and role of money market are another key topics.
C Working Capital Management
The key principle in working capital management is to manage between profitability and liquidity as they are mutually conflicting with each other. You are probably asked on funding needs and management of inventories, account receivables and account payables.
D Investment Appraisal
The techniques for both non-discounted cash flow (DCF) and DCF model in investment appraisal are required. In addition, understanding of net present value (NPV) calculation with different assumptions, such as inflation, taxation, risk, uncertainty and specific situations.
E Business Finance
Four major areas include sources of finance, estimating cost of capital, capital structure theories and financing for Small-and-Medium-sized Entities (SME). This topic is highly linked to investment appraisal especially on cost of capital.
F Business Valuation
Understanding of valuation for both equities and debt is required. Methodologies covered in this topic include Price-to-Earnings Multiple, Dividend Growth Model (DGM) and Net Asset Valuation Model (NAV) for equity valuation while option premium calculation required for convertible debt.
G Risk Management
Foreign exchange rate and interest rate management are two major areas in exam. Understanding different risk exposures and causes of fluctuations are needed. You are also expected to know different hedging techniques and instruments for both foreign exchange rate risk and interest rate risk.
H Employability and technology skills
Demonstrate proper technology and employability skills in the exam. Students should show they are able to work with different question item types, manage information in digital format and use relevant functions in the exam to prepare and present answers.
Perhaps you find the topics above are separated, however, they are linked together in real business world as well as the syllabus design. DCF techniques are important in investment appraisal while cost of capital is one of key parameters in the calculation of NPV.
A manufacturing or trading company working with overseas suppliers or customers, they do not only take care on their working capital items on funding needs but also foreign exchange rate risk.
Financial management objective is to optimize shareholders’ wealth while the business valuation models are the way to measure whether the wealth is optimized.
Time Management
The general principle in ACCA Applied Skills Module exam is 1 mark per 1.8 minute which means you have 100 marks to complete an exam within 180 minutes.
However, you have to know the secret behind or else, you cannot complete on time even you try to do so especially in Section A.
An article published by ACCA “Financial Management – Examiner Approach” states “Candidates are advised to allocate time to this section as a whole, rather than trying to allocate time to each individual question.”
You are advised to bear in mind how to allocate time wise and smart in Section A so that you can complete all objective test questions within the time limit.
Technical Articles
It is a section sharing with you on ACCA Financial Management (FM) technical articles to help you understanding of complex concepts in simple way. In addition, you can find exam tips in our examiner review report on ACCA Financial Management exam.
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