How hard is ACCA Financial Management?

FM is one of ACCA's Applied Skills exams. Every question is compulsory, the pass mark is 50%, and 40 of the 100 marks are in two longer questions that ask you to calculate and then explain what the figures mean.

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%

What makes it demanding

The breadth: seven syllabus areas, from working capital and investment appraisal to business finance, valuations and currency and interest rate risk, and Sections A and B can test any of them.
Section C's longer questions, mainly on working capital, investment appraisal and business finance, where a long calculation such as an NPV with tax and inflation comes with a discussion.
The time: 1.8 minutes a mark leaves little room to rework a long calculation.

How to make it manageable

Learn each technique until the steps are automatic, practise reading what a question asks before calculating, and sit timed papers so the pace is familiar before the exam.

Try 3 questions

Question 1 · Section A · Syllabus D42 marks

Lease or buy, replacement and capital rationing

Kelso Co is comparing leasing a machine with borrowing to buy it, discounting at its after-tax cost of borrowing. Tax relief on lease payments is received a year after each payment's accounting year.

Which TWO of the following would change the present value of the cost of leasing? (2 marks)

Tick 2A fall in the machine's expected scrap valueA rise in the purchase price of the machineA rise in the rate of tax on profitsPaying each lease rental in advance instead of in arrearsA change in the rate of tax-allowable depreciation

Question 2 · Section A · Syllabus F1 to F42 marks

Income-based valuation

Penrith Co is an unlisted company. Its profit after tax for the year just ended was $3,880,000, and this is expected to be maintained. It has no preference shares.

Jarrow Co, a listed company in the same industry with similar risk and growth, has a price/earnings ratio of 9. Buyers of unlisted shares in this industry reduce listed price/earnings ratios by 35% to allow for the lack of a market in the shares.

What is the value of Penrith Co's equity on a price/earnings ratio basis, to the nearest $? (2 marks)

Question 3 · Section A · Syllabus E1, E32 marks

Internal finance, dividends and relative costs

Ingleby Co has gone into liquidation.

Which of the following will be paid first from the proceeds of its assets? (2 marks)

Lenders secured by a fixed chargeHolders of unsecured loan notes, ranked by the date of issuePreference shareholdersOrdinary shareholders

Next step

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ACCA's FM syllabus and study guide (PDF)

Questions people ask

Is ACCA FM hard?

It is broad and calculation heavy: 40 of the 100 marks are in two longer questions that mix figures and discussion, and every question is compulsory. Steady practice of each technique on the clock is what makes it manageable.

What is the pass mark for ACCA FM?

50%, as for every ACCA Qualification exam.

How much of FM is calculation?

ACCA's study guide says the exam contains both computational and discursive elements, and some questions take a scenario or case study approach. Expect to calculate and then explain what your figures mean.

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