F9 exam tips – December 2012 sitting

Opentuition

1 Lease and Buy + written about capital rationing
2 Economic order quantity calculations; written on just-in-time inventory management; written on receivables management.
3 Weighted average cost of capital, and project specific cost of equity
4 Rights issue = PE ratio valuations

Kaplan Financial

Investment appraisal: this is a key topic which is highly likely to be examined every time. The most common technique assessed is NPV with inflation and taxation although be prepared for a twist.
Working Capital Management: exams to date have covered much of this topic but it’s been a while since we’ve seen the more numerical aspects surrounding inventory or payables management.
Valuations: cash flow based values have yet to be examined
Business Finance: make sure you’re able to discuss the impact that different policies may have on company by being able to both calculate and interpret financial ratios.
Cost of Capital: it’s been a while since we’ve seen any of the more technical CAPM based calculations regarding de-gearing and re-gearing betas.

BPP

The Examination contains four compulsory 25 mark questions, usually each question features a scenario and multiple requirements. Approximately 50% of the marks will be awarded for calculations and 50% for discussion. It is important that you practise both skills.
Anthony Head (F9 Examiner) has repeatedly stated that he will test across the whole syllabus. In many post exam commentaries he has stated that candidates who were well prepared and who had studied all parts of the syllabus did well on this paper. Candidates who were not successful may have focused on a small number of topic areas.
Investment Appraisal, WACC and Working Capital have featured in most exams, but just focusing on these topics alone will not be enough to generate a pass. It’s possible to get a whole question on each of these topics but they may just form part of a single question.
To maximise your chances of passing you will need to ensure you have a wide understanding of the whole syllabus.

First intuition

Discussion of the economic environment and the impact on interest and exchange rates.
Working capital management.
Investment appraisal & cost of capital.
Business valuations.

LCA

Investment Appraisal: NPV including identification of relevant cash flows, tax saved on capital allowances, inflation and nominal cost of capital.
Calculation of a project specific cost of capital and discussion.
Special investment decisions: lease or buy.
Working Capital Management: Working Capital characteristics of different businesses and the working capital cycle.
Overcapitalisation vs overtrading.
All aspects of receivables management including credit control, discounts and factoring.
Sources of finance and cost of capital.
Theories of Capital structure (Modigliani and Miller).
Company valuation.
Dividend growth model vs market value discussion.
Foreign exchange risk management.

Becker

Interest rate risk.
ARR and (discounted) payback.
Leases versus buy decisions.
Bond valuation.

LSBF

Investment appraisal with tax and inflation possibly a bit of sensitivity or lease or buy.
WACC computation possibly with a bit of Project specific cost of equity.
Working capital to include cash management eg miller-orr model or cash budgeting and financing working capital.
Business finance to include a bit of dividend policy and debt financing.
Valuation to include PE ratio method and dividend growth model.

best of luck with exam!
ansi