The Essential Guide to Passing Your Financial Management Exam

If you’re wondering how to pass your ACCA Financial Management exam, this comprehensive guide will tell you everything you need to know to pass the first time. Whether you’ve got ACCA Financial Management (FM) coming up, are considering enrolling or want to know how to resit, you need to keep reading.

Here’s a list of our guide’s contents:

• Overview
• Exam Format
• Syllabus Guide
• Study Tips
• Exam Technique
• What the Examiners Say

Overview

The Financial Management syllabus is designed to help you develop the skills expected of a Finance Manager operating in the finance function of a business. It expands on some basic topics you will have covered in Management Accounting, but also introduces you to new knowledge around in relation to investment, financing and dividend policy decisions.

Financial Management is one of the Applied Skills subjects within ACCA and the skills learned here will underpin the later Strategic Professional subject Advanced Financial Management (if you choose it), as well as elements of Strategic Business Leader. Therefore, it’s essential to build a strong foundation of knowledge while studying for the Financial Management course.

Exam Format

The Applied Skills papers follow the same format. They are all assessed by Computer Based Exams (CBEs) and you have a total time of three hours to complete the exam, after up to 10 minutes of reading the CBE instructions. The pass mark, like all other exams in the ACCA qualification, is 50%.

The FM exam consists of three sections with all compulsory questions. The breakdown of these is as follows:

• Section A comprises 15 Objective Test (OT) questions worth 2 marks each, for a total of 30 marks. These can come from any syllabus area.
• Section B contains 3 OT Case Scenarios each with 5 questions worth 2 marks each, again for a total of 30 marks. Once again these can come from any syllabus area.

This means that 60% of the paper can come from any topic on the syllabus, so failing to cover the full course could prove very costly in the exam. Think about it, if you don’t cover a topic that comes up as 5 different questions in an OT case scenario, you risk losing 10 marks already – not the start you want for the exam!

• Section C is the Constructed Response section and includes two 20 mark questions. These questions involve a mix of calculations, explanations and discussion, and will generally require an application to a scenario.

FM Syllabus Guide

As touched upon previously, the aim of the Financial Management syllabus is to develop the knowledge and skills expected of a finance manager, in relation to investment, financing, and dividend policy decisions.

In order to achieve this goal the ACCA outline 7 main capabilities that candidates should be able to do upon completion of this exam:

1. Discuss the role and purpose of the financial management function;
2. Assess and discuss the impact of the economic environment on financial management;
3. Discuss and apply working capital management techniques;
4. Carry out effective investment appraisal;
   Identify and evaluate alternative sources of business finance;
5. Discuss and apply principles of business and asset valuations;
6. Explain and apply risk management techniques in business.

Here’s the relational diagram showing how those areas tie together:

Download the complete Financial Management study and syllabus guide from ACCA Global to review in-depth.

You might also want to read ACCA’s bank of technical articles addressing syllabus areas for ACCA Financial Management.

5 Great FM Study Tips

1. Give yourself 12 weeks of preparation

At the Applied Skill level, the exams require a deeper understanding of the content to enable you to tailor your knowledge to different scenarios. This requires not just a good grasp of the theory but also a huge amount of question practice to develop your application skills, therefore we recommend using a full 12-week study cycle to prepare for this.

This allows you to follow our recommended study plan which includes 8 weeks of reviewing the content and learning through question walkthroughs, enabling you to get through the full syllabus as noted above; and 4 weeks of our exam technique phase which focuses on exam and question practice through our Mock Exams, exam preparations resources, webinars and Revision Bootcamp. Having this structured study in place will give you both a strong foundation of knowledge and god exam technique to give you the best chance of passing the paper.

 2. Cover the full syllabus

The examiner indicates that the constructed response questions will be based on topics from Working Capital Management, Investment Appraisal and Business Finance so you should make sure you are particularly strong in these areas. They can also feature in the OT questions as well.

However, Section C alone won’t get you the pass, the exam is all compulsory questions and sections A and B can come from any area of the syllabus; therefore having broad knowledge is essential to success. So to give yourself the best chance you need to practice questions from the full range of different topic areas, as this will give you the strongest foundation of knowledge to tackle whatever exam you are faced with on the day.

3. Don’t ignore the OTs

As we said above, the OT’s are worth 60% of this paper, so it’s impossible to pass unless you can score good marks in this area. This style of question requires a good understanding of the content and lots of practice questions. Fortunately, we have practice questions for each topic after the videos where you can test your understanding. Even when you are practising longer form questions make sure you understand the technical elements of the solution as these could make for potential OT questions.

Remember to always read the requirements of the OTs carefully and consider the format your answer needs to be in, particularly when calculations are involved. Also try practising OT questions and Cases under time pressure, to replicate the exam experience. Finally, Financial Management is a continuation (albeit quite a large step-up) from some topics you will have encountered in Management Accounting. If you find yourself struggling with some basic topics, go back and attempt some of the Management Accounting Revision quizzes for these areas to confirm your understanding.

4. Practice Makes perfect

There is no escaping the fact that the only way you will get a grasp of the concepts in this syllabus is through question practice. Therefore this should be the cornerstone of your study – practice, practice, practice. It’s the only way you will understand the key financial management concepts from different syllabus areas and begin to pick out the key information in the scenario.

Don’t get disheartened if this is difficult at the start – remember, you learn more from your failures than your successes, so even if you struggled with a question, review the solution, go back and review the content as needed, and then try that questions again to see if you’ve made sense of what was required. If you can keep working through questions in that manner, you will start to develop a very good understanding of both the content and how it is examined.

5. Become a Learnsignal member

Learnsignal is built by accountants, for accountants. It’s the tool our founders wished they had when they were studying. And it genuinely works. Our students rave about us; we’re ACCA Gold Approved Learning Providers with thousands of students all over the world. You can become a member by signing up for a monthly, quarterly or yearly plan to get access to everything you need to pass ACCA Financial Management and every other exam.

We cover the entire syllabus in comprehensive depth but in bitesize, specially-designed materials structured in the optimum way to help you pass. And we know that because we have a whole team of global ACCA experts and accountants behind us, including professional examiners.

Find out what you get with Learnsignal membership in this article

FM Exam Technique

1. Practice time management

The exam is all compulsory questions, therefore planning for the paper as a whole is vital, and you need a time management system in place throughout. With a 3 hour paper, you have 180 minutes to complete the 100 mark paper – so you should spend 1.8 minutes for every mark. You should apply this system to every question you work on, including the OTs, and break down longer questions by the marks available for each requirement.

This will ensure you spend the proportionate amount of time on a question, relative to its value. Doing this it makes sure you don’t leave behind the easy marks in each question and can make a good attempt at all questions before your time is up.

2. Read the requirements carefully before jumping into your answer

The most essential step in planning your answer is reading the requirement carefully and making sure you understand exactly what is being asked. Take your time in thinking about an approach and solution, then re-read the requirement to reinforce that your planned answer hit’s all the key points. Sometimes you will need to perform certain calculations before you can get to the discursive elements, such as when calculating working capital ratios or doing an investment appraisal.

If you start writing too quickly, or before you have done the necessary calculations you will miss key points and marks, so take time to ensure that you have understood the context of the question and apply the correct knowledge. Remember, always answer the question asked. Then from a time management perspective for each individual question, split out what is required in each requirement and plan your time accordingly.

3. Good layout and structure will help the marks roll in

Ensuring that you maintain a concise and professional structure to your answer will make your points clear to the examiner. To do this, you must be organized and have a systematic approach to answering the question. You should have built this skill set up during your question practice leading up to the exam.

Planning will enable you to produce logical, well thought out and organised answers that hit all the key points. When performing calculations, try to make them easy for the examiner, and include headings and explanations as needed. To do this, you need to be comfortable using the CBE tool, so you should practice as much as possible using the CBE practice area on the Learnsignal website and attempt Learnsignals CBE Mock. The more comfortable you are with the word processor and spreadsheet, the better your answer will appear to the examiner.

4. Make sure you are applying your knowledge to the scenario

You need to consider the scenario given before you start writing your answer, and make sure you are thinking about any financial management techniques or theory in the context of the company you are discussing.

The sentences you write should be on-topic at all times and add value to your answer – don’t waste time trying to provide additional information to show off your knowledge that is not related to the scenario. The examiner is not looking for generic statements; they are interested in seeing how you can use your knowledge from the syllabus to identify the key information relevant to the requirement.

5.  Don’t forget to discuss as well

Many students perform relevant calculations but don’t ever comment or conclude on what these mean. You need to understand why you are performing calculations and explain what these achieve. For example, in terms of investment appraisal, this might involve discussing whether or not you should invest based on your calculations.

Don’t shy away from making comments, and try to think of the calculations you perform in a commercial way, looking at how the results would affect the business. If you can do this, and provide explanations and conclusions as needed throughout, the examiner will see that you’ve a good grasp of the content, and your results will be a reflection of that.

What the FM Examiners Say

To finish let’s look at some points from the person who you need to please the most on the day of the exam – the examiner!

With regard to the OT questions in Sections A and B, they said:

“The objective test questions ensure broad coverage of the syllabus, and so all areas of the syllabus need to be carefully studied, as all learning outcomes can be tested in this part of the examination. Candidates preparing for the examination are therefore advised to work through as many objective test questions as possible, reviewing carefully to see how correct answers are derived in areas where they experience difficulty.”

They highlight our previous point that application is key to success in Section C:

“In respect of all questions in section C, it is important that candidates read the scenario carefully and answer the requirements directly. Candidates writing ‘all that they know about the topic’ without answering the question will invariably score few marks. Question requirements will often make reference to the company in the scenario, in which case candidates need to refer to the company’s circumstances in order to maximise the marks that can be gained.”

If you can avoid these mistakes, and take on board the advice given in this blog, you’ll have a really good chance of passing your FM exam!