Financial Management

ACCA Financial Management (FM) belongs to the Applied Skill Level papers. The subject dives deeper into understanding the role of a financial manager, and the expands into some of the most important decisions to be taken, namely

1. Financing Decision – Where to raise the money from?
2. Investment Decision – How to utilize these funds?
3. Dividend Decision – How to distribute the returns?
4. Risk Management – How to manage the risks revolving around cashflows?

Syllabus Contents

1.Role of Financial Manager and Financial Management Environment: This section introduces who is a financial manager and what are their roles and responsibilities, the key decisions to be taken, its connection with the strategies and various stakeholders of the company. It also provides an insight on how external factors to organization would influence the financial management function of a company, and the nature and roles of financial markets and institutions.

2.Investment Decision: This section deals with how to make use of the money available. It majorly deals with important areas of the syllabus:

a) Investment Appraisal: In this section, we gain an understanding of assessing long-term  projects using various investment evaluation methods and selecting the most optimal option.

b) Working Capital Management: This section covers the management of short-term funds necessary for a company’s daily operations. Specifically, it teaches how to strike a balance between profitability and liquidity when handling inventory, cash, trade receivables, and payables.

3.Financing Decision: This section gives an insight on the various sources of finance available and help us on evaluating them and choosing the one with the lowest cost. It further expands on providing details of how a finance manager must try to maintain an optimal capital structure within the company.

4.Business Valuation: This section deals with various methods of valuation for equity shares, bonds, and the whole business itself. {This content would be explained in detail for Advanced Financial Management (AFM).}

5.Dividend Decision: This syllabus area deals with the distribution of dividends to shareholders. This involves the amount to distribute, the frequency of distribution, consideration about investor expectations and alternatives to cash dividend.

6.Risk Management: This section deals with managing the cashflow risks due to fluctuating exchange rates and interest rates. We learn here various hedging techniques using simple bank transactions, timing adjustment of payments/receipt or with the help of derivative markets

{This content would be explained in detail for Advanced Financial Management (AFM).}

Exam Format:

The examination will have a duration of 3 hours and will consist of three distinct sections:

Section A: 30 Marks (Comprising 15 Objective Test Questions, each worth 2 marks)

Section B: 30 Marks (Comprising 3 cases, with each case containing 5 Objective Test Questions, each worth 2 marks, totaling 10 marks per case)

Section C: 40 Marks (Comprising 2 Constructed Response Questions, worth 20 marks each)

The passing score for all ACCA papers is 50.

Once again, welcome to Financial Management, and welcome to ATOMIC ACCA!

We look forward to seeing you in our lectures soon!