F9 Financial Management

F9 Financial Management (KAPLAN)
• Investment appraisal
This is a key topic which seems highly likely to be examined every time. The most common technique assessed is NPV with inflation and taxation although be prepared for a twist, possibly involving capital rationing or sensitivity calculations.


• Working Capital Management
Another key topic which is likely to examined every time. Exams to date have covered much of this topic but it’s been a while since we’ve seen the more numerical aspects surrounding receivables management or the models for cash management.


• Valuations
This has been examined in virtually every F9 exam to date although to a lesser extent in recent sittings. Asset and cash flow based values have yet to be examined although the PE ratio and dividend valuation methods still appear to be the more examinable areas.


• Business Finance
This topic has been heavily examined recently and in particular the impact of financing on ratios is an area the examiner likes. We’ve not seen much in relation to rights issues recently.


• Cost of Capital
This topic features in virtually every exam to a greater or lesser extent. Good coverage of all of the syllabus areas is therefore essential to ensure you can handle any eventuality on the day.


• Risk Management
Within this section of the syllabus, foreign exchange risk has been examined more often than interest rate risk. However, both are fairly under-examined areas of the syllabus as a whole and so this is a topic worth being on top of.

• The Financial Management Function and the impact of the economic environment upon it
These topics have largely been ignored thus far although a general discussion of the relationship between investment decisions, dividend decisions and financing decisions was required in the June 2010 exam.

Despite the examiner’s assertion in his first article about F9 that all topics carry equal weight we can probably expect these topics to continue to take a back seat. Having said that, a questions relating to the objectives in both the corporate and NFP sectors could be a potential.



F9 Financial Management (BPP)

Important areas to cover:

WACC: - any element of the WACC could be tested, including cost of equity, preference shares & different types of debt, along with their corresponding market values & then putting all of this together to calculate the WACC.

Investment decisions: the exam normally contains a question involving net present value (NPV), often with tax and inflation. In order to discount the NPV, you may be asked to first calculate a weighted average cost of capital (see above)

Working capital: questions on inventory management and receivables management are likely. Ensure that you are comfortable with working capital ratios as you may have to be able to put these in reverse

Sources of finance: a topical area, we would expect a part question on financing problems covering gearing issues and problems companies. Ratio analysis is likely to feature here with discussion of the numbers calculated. Ensure you are comfortable with the calculations of the different sources of finance. Islamic Finance was new on the syllabus for the June 11 exam but was not tested. It is possible it may come up in Dec 11, though if it does, it should be straightforward knowledge for a few marks only.

Business Valuations: commonly tested and a core syllabus area. The examiner often combines different syllabus areas within the same exam question – for example asking you to calculate a cost of equity and then use it to value a company.

F9 Financial Management (ICOUNT)

Net Present Value
· Working Capital Management
· Types of finance and WACC – change in Business Risk
· Analysing performance – financial & non financial measures
· PE and DVM valuations

F9 Financial Management (FIRST INTUITION)

Discussion of the economic environment and the impact on interest and exchange rates
Working capital management
Investment appraisal and cost of capital
Business valuation