ACCA Financial Management exam format

FM is a 3-hour computer-based exam in three sections, worth 100 marks in total, with 10 minutes before it starts to read the instructions. Every question is compulsory, and a formulae sheet and tables of discount and annuity factors are provided.

Length	3 hours, computer based
Section A	15 objective test questions of 2 marks, 30 marks
Section B	3 scenarios, each with 5 objective test questions, 30 marks
Section C	2 constructed response questions of 20 marks, 40 marks
Pass mark	50%

Section A: 30 marks

15 objective test questions of 2 marks. ACCA's study guide says Sections A and B can cover any area of the syllabus.

Section B: 30 marks

3 questions, each a short scenario with 5 objective test questions on it. Each question is marked on its own.

Section C: 40 marks

2 constructed response questions of 20 marks. ACCA's study guide says they will mainly come from working capital management, investment appraisal and business finance. The exam has both computational and discursive elements, so expect to calculate and then explain.

The syllabus

A Financial management function
B Financial management environment
C Working capital management
D Investment appraisal
E Business finance
F Business valuations
G Risk management

Pacing

3 hours for 100 marks is 1.8 minutes a mark: about 54 minutes for Section A, 54 for Section B and 36 for each Section C question.

Try 3 questions

Question 1 · Section A · Syllabus C1, C32 marks

Working capital

Which TWO of the following are elements of a company's working capital? (2 marks)

Question 2 · Section A · Syllabus D12 marks

Relevant cash flows and NPV

Wexford Co is considering a four-year project. The following information is available.

A machine costing $430,000 would be bought at time 0 and sold for $30,000 at the end of year 4.

The project needs 10,000 kg of material K at time 0. Wexford Co holds 9,000 kg, bought last year at $9 per kg, for which it has no other use; it could sell them for $1 per kg. Further supplies cost $11 per kg.

Each year the project would earn sales revenue less variable costs (other than skilled labour) of $300,000. It would also need 4,000 hours of skilled labour a year. Skilled labour is fully employed and cannot be hired, so the hours would be taken from other work that earns a contribution of $14 per hour after paying the labour rate of $19 per hour.

Working capital of $60,000 would be needed at time 0 and released in full at the end of year 4.

Head office overheads of $36,000 a year would be apportioned to the project; they would not change in total.

Annual cash flows arise at the end of each year. The cost of capital is 10%. Ignore taxation and inflation. Wexford Co discounts level annual cash flows with the annuity factor from the tables.

What is the project's net present value, to the nearest $? (2 marks)

Question 3 · Section A · Syllabus E22 marks

The weighted average cost of capital

Arden Co has ordinary share capital of $12 million in shares of $0.25 nominal value each, trading at $4.00 per share ex div. Its cost of equity is 12.5%.

It also has $5 million of 9% irredeemable preference shares of $1.00 each, trading at $1.03 per share ex div, and $30 million of 5% irredeemable loan notes, trading at $88 per $100 nominal value ex interest. Arden Co pays corporation tax at 20%, with tax relief on interest in the year it is paid.

What is Arden Co's weighted average cost of capital at market values, to one decimal place? (2 marks)

Next step

Sit a free timed practice exam Take the free diagnostic Start the free course tour

ACCA's FM syllabus and study guide (PDF)

Questions people ask

How many questions are in the ACCA FM exam?

15 objective test questions in Section A, 3 scenarios of 5 objective test questions in Section B, and 2 constructed response questions in Section C: 30 objective test questions and 2 longer questions.

How long is the ACCA FM exam?

3 hours, plus 10 minutes beforehand to read the exam instructions, as ACCA's study guide describes.

Which topics come up in FM Section C?

ACCA's study guide says the two 20-mark questions will mainly come from working capital management, investment appraisal and business finance.

n	1%	2%	3%	4%	5%	6%	7%	8%	9%	10%	11%	12%	13%	14%	15%	16%	17%	18%	19%	20%
1	0.990	0.980	0.971	0.962	0.952	0.943	0.935	0.926	0.917	0.909	0.901	0.893	0.885	0.877	0.870	0.862	0.855	0.847	0.840	0.833
2	0.980	0.961	0.943	0.925	0.907	0.890	0.873	0.857	0.842	0.826	0.812	0.797	0.783	0.769	0.756	0.743	0.731	0.718	0.706	0.694
3	0.971	0.942	0.915	0.889	0.864	0.840	0.816	0.794	0.772	0.751	0.731	0.712	0.693	0.675	0.658	0.641	0.624	0.609	0.593	0.579
4	0.961	0.924	0.888	0.855	0.823	0.792	0.763	0.735	0.708	0.683	0.659	0.636	0.613	0.592	0.572	0.552	0.534	0.516	0.499	0.482
5	0.951	0.906	0.863	0.822	0.784	0.747	0.713	0.681	0.650	0.621	0.593	0.567	0.543	0.519	0.497	0.476	0.456	0.437	0.419	0.402
6	0.942	0.888	0.837	0.790	0.746	0.705	0.666	0.630	0.596	0.564	0.535	0.507	0.480	0.456	0.432	0.410	0.390	0.370	0.352	0.335
7	0.933	0.871	0.813	0.760	0.711	0.665	0.623	0.583	0.547	0.513	0.482	0.452	0.425	0.400	0.376	0.354	0.333	0.314	0.296	0.279
8	0.923	0.853	0.789	0.731	0.677	0.627	0.582	0.540	0.502	0.467	0.434	0.404	0.376	0.351	0.327	0.305	0.285	0.266	0.249	0.233
9	0.914	0.837	0.766	0.703	0.645	0.592	0.544	0.500	0.460	0.424	0.391	0.361	0.333	0.308	0.284	0.263	0.243	0.225	0.209	0.194
10	0.905	0.820	0.744	0.676	0.614	0.558	0.508	0.463	0.422	0.386	0.352	0.322	0.295	0.270	0.247	0.227	0.208	0.191	0.176	0.162
11	0.896	0.804	0.722	0.650	0.585	0.527	0.475	0.429	0.388	0.350	0.317	0.287	0.261	0.237	0.215	0.195	0.178	0.162	0.148	0.135
12	0.887	0.788	0.701	0.625	0.557	0.497	0.444	0.397	0.356	0.319	0.286	0.257	0.231	0.208	0.187	0.168	0.152	0.137	0.124	0.112
13	0.879	0.773	0.681	0.601	0.530	0.469	0.415	0.368	0.326	0.290	0.258	0.229	0.204	0.182	0.163	0.145	0.130	0.116	0.104	0.093
14	0.870	0.758	0.661	0.577	0.505	0.442	0.388	0.340	0.299	0.263	0.232	0.205	0.181	0.160	0.141	0.125	0.111	0.099	0.088	0.078
15	0.861	0.743	0.642	0.555	0.481	0.417	0.362	0.315	0.275	0.239	0.209	0.183	0.160	0.140	0.123	0.108	0.095	0.084	0.074	0.065

n	1%	2%	3%	4%	5%	6%	7%	8%	9%	10%	11%	12%	13%	14%	15%	16%	17%	18%	19%	20%
1	0.990	0.980	0.971	0.962	0.952	0.943	0.935	0.926	0.917	0.909	0.901	0.893	0.885	0.877	0.870	0.862	0.855	0.847	0.840	0.833
2	1.970	1.942	1.913	1.886	1.859	1.833	1.808	1.783	1.759	1.736	1.713	1.690	1.668	1.647	1.626	1.605	1.585	1.566	1.547	1.528
3	2.941	2.884	2.829	2.775	2.723	2.673	2.624	2.577	2.531	2.487	2.444	2.402	2.361	2.322	2.283	2.246	2.210	2.174	2.140	2.106
4	3.902	3.808	3.717	3.630	3.546	3.465	3.387	3.312	3.240	3.170	3.102	3.037	2.974	2.914	2.855	2.798	2.743	2.690	2.639	2.589
5	4.853	4.713	4.580	4.452	4.329	4.212	4.100	3.993	3.890	3.791	3.696	3.605	3.517	3.433	3.352	3.274	3.199	3.127	3.058	2.991
6	5.795	5.601	5.417	5.242	5.076	4.917	4.767	4.623	4.486	4.355	4.231	4.111	3.998	3.889	3.784	3.685	3.589	3.498	3.410	3.326
7	6.728	6.472	6.230	6.002	5.786	5.582	5.389	5.206	5.033	4.868	4.712	4.564	4.423	4.288	4.160	4.039	3.922	3.812	3.706	3.605
8	7.652	7.325	7.020	6.733	6.463	6.210	5.971	5.747	5.535	5.335	5.146	4.968	4.799	4.639	4.487	4.344	4.207	4.078	3.954	3.837
9	8.566	8.162	7.786	7.435	7.108	6.802	6.515	6.247	5.995	5.759	5.537	5.328	5.132	4.946	4.772	4.607	4.451	4.303	4.163	4.031
10	9.471	8.983	8.530	8.111	7.722	7.360	7.024	6.710	6.418	6.145	5.889	5.650	5.426	5.216	5.019	4.833	4.659	4.494	4.339	4.192
11	10.368	9.787	9.253	8.760	8.306	7.887	7.499	7.139	6.805	6.495	6.207	5.938	5.687	5.453	5.234	5.029	4.836	4.656	4.486	4.327
12	11.255	10.575	9.954	9.385	8.863	8.384	7.943	7.536	7.161	6.814	6.492	6.194	5.918	5.660	5.421	5.197	4.988	4.793	4.611	4.439
13	12.134	11.348	10.635	9.986	9.394	8.853	8.358	7.904	7.487	7.103	6.750	6.424	6.122	5.842	5.583	5.342	5.118	4.910	4.715	4.533
14	13.004	12.106	11.296	10.563	9.899	9.295	8.745	8.244	7.786	7.367	6.982	6.628	6.302	6.002	5.724	5.468	5.229	5.008	4.802	4.611
15	13.865	12.849	11.938	11.118	10.380	9.712	9.108	8.559	8.061	7.606	7.191	6.811	6.462	6.142	5.847	5.575	5.324	5.092	4.876	4.675