ACCA Financial Management (FM): study notes Area by area, with worked examples and quizzes.

1. 01A. Financial management functionWhat financial management is for, and whom it serves. You will meet the investment, financing and dividend decisions and how they depend on one another, see why shareholder wealth maximisation rather than profit or EPS growth is a company's primary financial objective, and measure performance with ROCE, ROE, EPS, dividend cover, gearing, interest cover and total shareholder return. The module covers stakeholder conflicts, agency theory, managerial reward schemes and corporate governance, and ends with objectives and value for money in not-for-profit organisations.5 lessons · 3h 5m+

   • The nature and purpose of financial management35 min
   • Financial objectives and the relationship with corporate strategy40 min
   • Stakeholders and impact on corporate objectives55 min
   • Financial and other objectives in not-for-profit organisations40 min
   • Module 1 quiz15 min
2. 02B. Financial management environmentThe economy, markets and institutions every finance manager works within. You will see how fiscal, monetary, interest rate and exchange rate policy change a company's demand, costs, cost of finance and investment decisions, and how competition policy, government assistance, green policies and governance regulation shape them. The module then covers money and capital markets, stock and bond markets, financial intermediaries, the risk and return of different securities and the impact of Fintech, and ends with the money markets and their instruments, including the yield on Treasury bills and certificates of deposit.4 lessons · 2h 35m+

   • The economic environment for business50 min
   • The nature and role of financial markets and institutions45 min
   • The nature and role of money markets45 min
   • Module 2 quiz15 min
3. 03C. Working capital managementHow much a business invests in inventory, receivables and cash, how it manages each, and how it funds the total. You will calculate the cash operating cycle and the working capital ratios, the economic order quantity with quantity discounts, the effective annual cost of settlement discounts, the net benefit of factoring and the cost of invoice discounting, and prepare a cash flow forecast. The module applies the Baumol and Miller–Orr cash models with the formulae sheet, and ends with the working capital requirement, overtrading, and aggressive, conservative and matching funding policies.4 lessons · 3h 10m+

   • The nature, elements and importance of working capital50 min
   • Management of inventories, accounts receivable, accounts payable and cash75 min
   • Determining working capital needs and funding strategies50 min
   • Module 3 quiz15 min
4. 04D. Investment appraisalHow a finance manager decides whether a long-term investment is worth making. The module covers relevant cash flows, ARR, payback, discounted payback, NPV and IRR, then builds inflation, tax and tax-allowable depreciation into a full NPV pro forma. It goes on to sensitivity analysis, expected values and other ways of allowing for risk, and finishes with three special decisions: lease or buy, asset replacement and single-period capital rationing.5 lessons · 4h+

   • Investment appraisal techniquesFree preview55 min
   • Inflation and taxation in DCF60 min
   • Risk and uncertainty in investment appraisal50 min
   • Lease or buy, asset replacement and capital rationing60 min
5. 05E. Business financeWhere a business finds its money and what that money costs. The module covers short and long-term sources of finance, including rights issues, Islamic finance and dividend policy, then the cost of equity, debt and preference shares and the weighted average cost of capital. It goes on to the relative costs of finance, gearing and the creditor hierarchy, capital structure theories and project-specific discount rates, and the financing problems and sources of finance of small and medium-sized entities.6 lessons · 4h 40m+

   • Sources of business finance55 min
   • Estimating the cost of capitalFree preview60 min
   • Sources of finance and their relative costs50 min
   • Capital structure theories and practical considerations55 min
6. 06F. Business valuationsWhy businesses, shares and debt are valued, and how: asset-based, earnings-based and cash-flow-based models for shares, the present value method for irredeemable, redeemable and convertible debt and preference shares, and the negotiating range between seller and buyer. The module closes with the efficient market hypothesis, the practical reasons real values differ from model values, and behavioural finance, followed by a quiz.5 lessons · 3h 30m+

   • The purpose of valuing businesses and financial assets40 min
   • Models for valuing shares60 min
   • Valuing debt and other financial assets50 min
   • The efficient market hypothesis and practical considerations45 min
   • Module 6 quiz
7. 07G. Risk managementForeign currency and interest rate risk: transaction, translation and economic risk, gap exposure and basis risk, and why exchange rates and interest rates move, with purchasing power parity, interest rate parity, the four-way equivalence and the yield curve. The module then works the hedges in full, from netting and matching to forward contracts, money market hedges and forward rate agreements, explains futures, options and swaps at the level the study guide sets, and finishes with a quiz.5 lessons · 3h 35m+

   • Types of risk and approaches to managing it40 min
   • Why exchange rates and interest rates change50 min
   • Hedging foreign currency risk60 min
   • Hedging interest rate risk50 min
   • Module 7 quiz
8. 08H. Employability and technology skillsThe skills the computer-based FM exam rewards beyond technical knowledge: planning your time across the three sections, reading requirements precisely, building NPV and IRR calculations in the spreadsheet with labelled inputs, years across the columns and functions used correctly, and writing advice that uses your own figures. The module works a Section C style investment appraisal in full and finishes with a quiz on exam technique.2 lessons · 1h+

   • The computer-based exam: spreadsheets, workings and presentation45 min
   • Module 8 quiz15 min

• AFinancial management function
• BFinancial management environment
• CWorking capital management
• DInvestment appraisal
• EBusiness finance
• FBusiness valuations
• GRisk management
• HEmployability and technology skills

Questions