Financial Management-FM

Financial Management (FM) – Read all ACCA Technical Articles, Examiners Reports, Exam Tips and Many more.

Financial Management – examiner approach

This article explains the approach to examining Financial Management and clarifies any uncertainty regarding the content of the syllabus. For students planning to take this exam, a good place to start is the ACCA website, where the Financial Management Syllabus and Study Guide – together with the Specimen Exam and its suggested answers – can be found. The aim of Financial Management is to develop the …

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Objective questions for session CBEs

What you need to know about the objective test questions for session CBEs for PM, TX, FR, AA and FM. What you need to know about the objective test (OT) questions in Session CBE format exams for: Performance Management (PM) Taxation (TX) * Financial Reporting (FR) Audit and Assurance  (AA) Financial Management (FM) * UK version only How many marks …

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How to attempt discursive requirements in Financial Management

It has been noted in a number of examiner reports for Financial Management that calculation requirements are answered better than discursive requirements. Therefore, this article will look at how to answer a discursive requirement to a Financial Management question. First example First, let’s consider the following requirement from Question 32(c) of the September/December 2017 sample questions. This requirement is as …

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Optimum capital structure

Is it possible to increase shareholder wealth by changing the capital structure? The first question to address is what is meant by capital structure. The capital structure of a company refers to the mixture of equity and debt finance used by the company to finance its assets. Some companies could be all-equity-financed and have no debt at all, whilst others …

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Alternative Receivables Collection Techniques

This article considers two methods a company could adopt in order to speed up the collection of cash from its customers. Adopting a rigorous receivables collection system is essential to the ability of a company to pay its suppliers and employees, and even survive. Even where such a system is adopted and effective steps are taken to chase late payers, …

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Cost of capital, gearing and CAPM – part 2

Project appraisal 1 – pure equity finance So now we have two ways of estimating the cost of equity (the return required by shareholders). Can this measurement of a company’s cost of equity be used as the discount rate with which to appraise capital investments? Yes it can, but only if certain conditions are met: A new investment can be …

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Cost of capital, gearing and CAPM – part 1

A fundamental part of financial management is investment appraisal: into which long-term projects should a company put money? Discounted cash flow techniques (DCFs), and in particular net present value (NPV), are generally accepted as the best ways of appraising projects. In DCF, future cash flows are discounted so that allowance is made for the time value of money. Two types …

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Foreign currency risk and its management

This article has been updated to reflect the knowledge of basis risk that students are expected to have for Financial Management. Increasingly, many businesses have dealings in foreign currencies and, unless exchange rates are fixed with respect to one another, this introduces risk. There are three main types of currency risk as detailed below. Economic risk. The source of economic …

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Advanced investment appraisal

Investment appraisal is one of the core topics within Financial Management and it is a topic which has been well represented in the Financial Management exam. Investment appraisal is one of the eight core topics within Financial Management and it is a topic which has been well represented in the exam. The methods of investment appraisal are payback, accounting rate of return …

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Business finance

Section E of Financial Management syllabus deals with business finance: What types of finance? What sources? What mix? The article will first consider a business’s formation and initial growth, then a company that is well-established and mature, and will look at the financing choices and decisions that could face it at various stages. Formation and initial growth Many businesses begin …

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