ACCA

ACCA Financial Management (FM) Exam Syllabus Explained

The ACCA Financial Management (FM) exam prepares you for the role of a Chief Financial Officer (CFO). The syllabus covers raising finance, managing investments, working capital, dividend policy, financial ratios, and risk management. Key areas tested in Section C include cost of capital, investment appraisal, and working capital management. Success requires steady, consistent study rather than last-minute cramming.

What is the focus of the ACCA FM exam?

The FM exam is designed to prepare students for decision-making at CFO level. This includes:

Raising finance through loans, bonds, or shares.
Managing the cost of capitaland dividend policy.
Appraising investments and managing working capital.
Understanding financial markets and theories.
Applying risk management strategies.

👉 In short, the exam equips you with the financial tools needed to raise, allocate, and manage funds effectively.

What is the cost of capital and why is it important?

As a CFO, one of your first responsibilities is raising money for the company. To do this, you must understand:

Loans:How much interest are you willing to pay to a bank?
Bonds:What interest rate can you offer to investors?
Shares:What dividend pattern can you sustain?

This area links to cost of capital, which is a major exam topic and often tested in Section C. Students must not only calculate figures but also discuss issues, such as:

Why might bonds be better than shares?
What are the disadvantages of relying too much on debt?

How does dividend policy feature in the syllabus?

Dividend decisions affect shareholders directly, so you will study:

Dividend relevance theories(e.g. whether dividends affect company value).
Dividend policy choices, such as stable vs. fluctuating dividends.
The relationship between dividend decisions and market efficiency.

👉 Expect both calculation and discussion-based questions in this area.

Why do you need to study market theory?

Understanding markets helps you see how financial decisions affect company valuation. You will need to know:

Types of market efficiencyand their implications.
How financing and dividend policies interact with investor expectations.

This ensures that you can link corporate finance policies with shareholder value.

What is investment appraisal and how is it tested?

Investment appraisal is one of the most important areas of the syllabus. It involves evaluating whether new projects or investments are worthwhile. You will study:

Net Present Value (NPV)
Internal Rate of Return (IRR)
Ranking projects(divisible vs. non-divisible)
Payback periods and profitability indexes

👉 This topic frequently appears in Section C constructed response questions, where you must combine calculations with clear written explanations.

What is working capital management?

Working capital management focuses on short-term financial health. As CFO, you need to manage:

Accounts receivable:Extending credit terms to attract customers.
Accounts payable:Negotiating payment terms with suppliers.
Inventory management:Deciding on the best order size.
Cash management:Ensuring liquidity without relying too heavily on overdrafts.

This is another major Section C topic that combines numbers with discussion.

How does ratio analysis support financial decision-making?

Ratio analysis gives you a 3D view of company performance. It allows you to assess:

Profitability
Liquidity
Risk
Efficiency

👉 Ratio questions may appear in multiple sections of the exam and often require both calculations and interpretation.

What risks are included in the syllabus?

Risk management is vital for CFOs, especially in a global business environment. You will study:

Foreign exchange (forex) risk:Predicting future exchange rates.
Interest rate risk:Managing the impact of borrowing costs.

Practical application is emphasized, especially for companies dealing with international suppliers and customers.

Why is steady study important for FM?

The FM syllabus is broad and varied, covering everything from cost of capital to working capital. Some topics connect closely (e.g. investment appraisal and cost of capital), while others stand apart (e.g. working capital). Because of this:

Do notleave study until the last week.
Aim to study in small, regular sessions.
Even 15 minutes a daycan build knowledge over time.

👉 Consistency is key. This syllabus requires time to absorb, not cramming.

Final takeaway

The ACCA Financial Management exam prepares you for real CFO responsibilities: raising finance, managing investments, balancing risk, and maximizing company value. To succeed:

Master core areas like cost of capital, investment appraisal, and working capital.
Practice combining calculations with narrative explanations.
Study steadily and avoid last-minute preparation.

If you approach the syllabus with discipline and consistency, you will build the strong financial management skills needed for both the exam and your career.

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