Financial Management (FM) is the ninth exam of your ACCA journey that you will be required to appear in and the sixth and final exam of the ACCA skills level. This course will focus on developing deeper financial management skills keeping in view the duties and responsibilities of a financial manager relating to the analysis of the economic environment of the business, investing and financing decisions and the dividend policy. NCFM Academy Hyderabad, One of the leading Training centers for ACCA Coaching classes in Hyderabad Ameerpet offers ACCA Paper F9 Financial Management training.
Financial Management (FM) is a three-hour computer-based examination where all questions will be compulsory. All areas of the syllabus will be tested. The paper will be based on computational and discursive elements and some questions will have a scenario or case study like approach. Prior to the start of the three hours of the exam, students will be given ten minutes to read the exam instructions.
Section A of the computer-based exam comprises 15 objective test questions of 2 marks each plus additional content as per below.
Section B of the computer-based exam comprises three questions each containing five objective test questions plus additional content as per below.
Section C of the exam comprises two 20-mark constructed response questions. The two 20-mark questions will mainly come from the working capital management, investment appraisal and business finance areas of the syllabus.
Section A and section B questions can cover any areas of the syllabus. Candidates are provided with a formulae sheet and tables of discount and annuity factors.
Syllabus of ACCA Paper F9 Financial Management
This syllabus is divided into seven sections with further sub-sections.
A- Financial management function
This is the first section of this course and it builds upon your earlier studies to develop an in-depth understanding of financial management and its scope in a business environment and how financial management interlinks financial and management accounting together. Students will learn corporate objectives and strategy and their relationship with the financial management of a company. This section will also discuss the impact of corporate objectives on stakeholder relations and how different categories of stakeholders are affected by the decisions made and the methods in which stakeholder concerns can be addressed.
This section will cover the financial and other objectives involved in the governance f not-for-profit organizations.
B- Financial management environment
This is the second section of this course and it covers the financial management environment. The students will learn about the macroeconomic environment and how the government policies and objectives intersect with and shape business objectives.
This section will also cover the role of financial markets including money and capital markets and how they facilitate financial activity. This section will also cover the role and function of stock markets and the risk and reward relationship of various securities. The role of money markets will be covered in detail along with the role of financial institutions to facilitate financial activities in different markets.
C- Working capital management
This is the third section of this course and it covers working capital management. Students will learn the nature, elements, and importance of working capital management. They will be required to identify the benefits of working capital management in relation to profitability, liquidity and other aspects of the business. This section will also cover the cash-generating cycle and the role of accounts payable and receivables. Financial ratios related to liquidity position will be covered. Inventory management techniques such as economic order quantity will be covered under this section as well which you may have studied under your earlier studies.
Students will also be required to understand the relevant techniques to hold cash and manage accounts payables and receivables.
D- Investment Appraisal
This is the fourth section of this course and it covers investment appraisal. You may be familiar with investment appraisal techniques in your previous studies. This section will introduce the accounting rate of return, payback, discounted payback, net present value and internal rate of return methods for investment appraisal. Students will be required to calculate using these methods as well as understand the reason why discounted cash flows are better than not discounted cash flows.
This section will also cover the real and nominal cash flows and the effect of taxation on investment appraisal. Students will also need to understand risk and uncertainty and the effect they have on investment appraisal. Students will be required to apply sensitivity and probability analysis to investment appraisal.
Students will also be required to understand various specific investment decisions including lease or buy, asset replacement and capital rationing.
This is the fifth section of this course and it extensively covers various modes of business finance. This section will cover methods of raising short term finance, medium and long term finance, Islamic finance, and equity finance.
Students will also be required to understand and calculate the cost of capital using different techniques including the dividend growth model and the capital asset pricing model (CAPM). Students will need to estimate the cost of debt including irredeemable debt, redeemable debt, convertible debt, preference shares, and ordinary shares. This section will also require students to differentiate between the average and marginal cost of capital and also understand and calculate the weighted average cost of capital (WACC) using a book and market value weightings. Students will also be required to understand the risk and reward relationship between equity and debt.
This section also covers capital structure theories and practical considerations and finance for small and medium-sized industries.
F- Business valuations
This is the sixth section of this course and it covers business valuation. Students will be introduced t the nature and purpose of the valuation of business and financial assets. Models for the valuation of shares including net book value, net realizable value, and net replacement value methods. Students will be required to understand and apply income and cash-based valuation models. The valuation of debt and other financial assets will also be covered along with the efficient market hypothesis (EMH) and practical considerations in the valuation of shares
G- Risk management
This is the seventh and final section of this course and it covers risk management within the financial management environment. Students will learn about different types of financial risk an entity is exposed to and how to overcome or mitigate some of those risks including exchange rate risk, interest rate risk through hedging.