ACCA Financial Management (FM)

Explore the economic environment for business within ACCA financial management, and examine how external economic factors shape financial decisions.

Explore how financial markets and money markets function to allocate capital and manage liquidity. Understand the role of institutions in supporting these markets within ACCA financial management.

Explore how working capital covers cash, inventory, receivables, and short-term liabilities, and how the cash operating cycle and liquidity ratios guide profitability.

Master inventory management with economic order quantity, holding costs, and reorder levels. Apply concepts of buffer safety, average inventory, discounts, early settlement, and credit policies.

Learn to manage working capital finance through cash flow forecasts, cash management, and funding strategies, including surplus investment and deficit remedies in real-world scenarios.

Explore the investment and capital budgeting process, evaluating relevant cash flows and payback period, while distinguishing capital and revenue expenditure and applying opportunity costs and return on capital employed.

Explore discounted cash flow methods for investment appraisal, covering present value, compounding, discounting, and the role of cost of capital in NPV and IRR decisions.

Master discounting cash flows with real and nominal rates under inflation, and analyze tax depreciation and timing to improve project evaluation using NPV.

Explore project appraisal, distinguishing risk from uncertainty, and apply sensitivity analysis, probability analysis, and risk-adjusted techniques, including discounted payback and certainty equivalents, to investment decisions.

Assess how to decide between lease and buy options, replace assets, and rank investment projects using net present value, profitability index, and capital rationing in a discounted cash flow framework.

Explore sources of finance for firms, from short-term tools like overdrafts and trade credit to long-term debt, equity, and islamic finance contracts that share risk and reward.

Explore dividend policy as an internal source of finance, focusing on retained earnings and working capital efficiency, and compare residual, traditional, and irrelevancy theories, including scrip dividends and share repurchases.

Explore gearing and capital structure, define gearing ratio and prior charged capital, compare debt and equity, and examine effects on financial risk, interest cover, and cost of capital.

Explore cost of capital, including cost of equity, cost of debt, and the weighted average cost of capital, and apply dividend growth and CAPM in valuation.

Explore capital structure theories, compare traditional and Modigliani and Miller views, and see how gearing affects WACC and the use of CAPM for project-specific capital and NOI-based valuations.