Financial Management
Develop core financial management skills including investment appraisal, business finance, working capital management, business valuations, and risk management. The essential paper for aspiring finance professionals.
Exam Duration
3 hours
Pass Mark
50%
Students
30,000+
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ACCA Financial Management
Financial Management (FM) is an Applied Skills paper that develops essential skills in financial management and decision making. It equips students with the knowledge to make sound financial decisions regarding investment, financing, and dividend policies.
The paper covers the financial management function and its objectives, the financial management environment including financial markets, working capital management, investment appraisal techniques (NPV, IRR, payback), business finance including sources of finance and cost of capital, business valuations, and risk management techniques including hedging.
FM provides the critical link between accounting and finance, preparing students to advise on key financial decisions. It is the prerequisite for Advanced Financial Management (AFM) at the Strategic Professional level and is one of the most popular ACCA papers.
What You'll Learn
- Explain the role and objectives of the financial management function
- Evaluate working capital policies and manage cash, inventory, and receivables
- Apply investment appraisal techniques including NPV, IRR, and payback
- Evaluate sources of finance and calculate the cost of capital
- Apply business valuation models and understand market efficiency
- Assess and manage financial risks using hedging techniques
Career Relevance
FM is essential for roles in corporate finance, treasury management, financial planning, and investment analysis. The paper prepares you for positions such as Financial Analyst, Treasury Analyst, Corporate Finance Associate, and Financial Planning Manager.
Exam Format
- Duration:3 hours
- Pass Mark:50%
- Format:Section A: Objective test questions (20 marks) and Section B: Constructed response questions (80 marks)
Prerequisites
Completion of ACCA Applied Knowledge papers. Knowledge from both MA (Management Accounting) and FA (Financial Accounting) supports the study of FM.
FM Exam Syllabus
The FM syllabus covers the key topics you'll be examined on.
- The nature and purpose of financial management
- Financial objectives and the relationship with corporate strategy
- Stakeholders and impact on corporate objectives
- Financial and other objectives in not-for-profit organisations
- The economic environment for business
- The nature and role of financial markets and institutions
- The nature and role of money markets
- The nature, elements and importance of working capital
- Management of inventories, accounts receivable, accounts payable and cash
- Determining working capital needs and funding strategies
- Investment appraisal techniques
- Allowing for inflation and taxation in DCF
- Adjusting for risk and uncertainty in investment appraisal
- Specific investment decisions (lease or buy, asset replacement, capital rationing)
- Sources of, and raising, business finance
- Estimating the cost of capital
- Sources of finance and their relative costs
- Capital structure theories and practical considerations
- Finance for small- and medium-sized entities (SMEs)
- Nature and purpose of the valuation of business and financial assets
- Models for the valuation of shares
- The valuation of debt and other financial assets
- Efficient market hypothesis (EMH) and practical considerations
- The nature and types of risk and approaches to risk management
- Causes of exchange rate differences and interest rate fluctuations
- Hedging techniques for foreign currency risk
- Hedging techniques for interest rate risk
ACCA FM Exam Structure
Everything you need to know about the FM exam format, timing, and what to expect on exam day.
Computer-Based Exam (CBE)
3 hours
Section A: Objective test questions (20 marks) and Section B: Constructed response questions (80 marks)
March, June, September, December
50%
Your Guide To Pass ACCA FM
Expert tips from our tutors to help you prepare effectively and pass your FM exam on the first attempt.
Master NPV Calculations
Net present value is the most important investment appraisal technique in FM. Practice NPV calculations with tax, inflation, and working capital adjustments until you can do them confidently.
Know WACC Inside Out
The weighted average cost of capital (WACC) is fundamental to FM. Understand how to calculate the cost of equity (CAPM, dividend growth model), cost of debt, and combine them into WACC.
Practice Working Capital Questions
Working capital management is a significant topic. Practice calculations for inventory management (EOQ), receivables management, and cash management techniques.
Understand Hedging Mechanisms
Risk management using forwards, futures, options, and money market hedges is tested regularly. Understand when each technique is appropriate and be able to compute the outcomes.
Link Theory to Calculation
FM requires both calculations and written explanations. Practice writing clear explanations of financial concepts alongside your numerical work.
Study with Learnsignal
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