In the ACCA Applied Skills level, FM (Financial Management)—formerly F3—moves beyond basic bookkeeping to focus on how financial managers make strategic decisions regarding investment, financing, and dividend policy.
FM Syllabus Overview
The curriculum is organized into seven key capability areas:
- Financial Management Function: Understanding the relationship between financial objectives (shareholder wealth maximization) and the macroeconomic environment.
- Working Capital Management: Techniques for managing liquidity, including inventory, receivables, payables, and cash (e.g., the Baumol and Miller-Orr models).
- Investment Appraisal: Evaluating projects using Net Present Value (NPV), Internal Rate of Return (IRR), and discounted payback, including the impact of inflation and taxation.
- Business Finance: Identifying sources of finance (equity vs. debt) and calculating the Weighted Average Cost of Capital (WACC).
- Business Valuation: Estimating the value of businesses and shares using asset-based, income-based, and cash-flow-based models.
- Risk Management: Managing exposure to foreign exchange risk (forward contracts, money market hedges) and interest rate risk.
- Employability & Technology: Using spreadsheets to model financial decisions and perform sensitivity analysis.
Key Learning Outcomes
By the end of this course, you should be able to:
- Discuss the role and purpose of the financial management function.
- Assess and manage working capital using relevant techniques.
- Appraise capital investment projects using DCF methods and identify non-financial factors.
- Recommend sources of finance and calculate the cost of capital.
- Value businesses and financial assets for potential acquisitions.
- Explain and apply techniques to mitigate financial risks.
Exam Format
The FM exam is a 3-hour computer-based exam (CBE):
- Section A (30 marks): 15 Objective Test Questions (2 marks each).
- Section B (30 marks): 3 case-based scenarios, each with 5 Objective Test Questions.
- Section C (40 marks): 2 Constructed Response questions (20 marks each), typically focusing on Working Capital, Investment Appraisal, or Business Finance