F9 Exam tips from BPP, Kaplan, ATC and First Intuition – June 2011 sitting

BPP

Working capital: questions on inventory management and receivables management are likely. Ensure that you are comfortable with working capital ratios.

Investment decisions: the exam normally contains a question involving net present value (NPV), often with tax and inflation. In order to discount the NPV, you may be asked to first calculate a weighted average cost of capital.

Sources of finance: a topical area, we would expect a part question on financing problems covering gearing issues and problems companies. Ratio analysis is likely to feature here with discussion of the numbers calculated. Ensure you are comfortable with the calculations of the different sources of finance.

Business Valuations: commonly tested and a core syllabus area. The examiner often combines different syllabus areas within the same exam question – for example asking you to calculate a cost of equity and then use it to value a company.

Financial environment & risk management: recent exchange rate and interest rate volatility could impact on a company’s financial management plans – a part question could be set, with discussion and calculations on hedging techniques.

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

Kaplan tips

• Investment appraisal – complex NPV or IRR with tax and possibly inflation.
• Working capital management – cash operating cycle.
• Valuations – cash flow based values.
• Business finance – Islamic financing could be tested soon.
• Risk management – foreign exchange risk.

Examiner’s tips

Antony Head, the examiner for F9 Financial management, was concerned that too many students try to pass his paper on calculations alone. “You can’t get through just on the numbers,” he said.
Head, who has a marking team of 58, said many students also suffer from exam inertia – they love to take an answer from one exam and put it in the next one. He said: “Each examination consists of new questions – my contract says they have to be unique.”
Why, he asked, do students have so much difficulty in business finance? With long-term financing in each of the last four exams he was hoping they would start to get better at it – they aren’t.
The Past Examiner’s Reports are a key free resource. They take Head ages to write and dissect each question. He stressed that candidates must study the whole syllabus section by section. You must also develop an FM Toolkit. That means mastering the techniques you will need in the exam. Of course you need to study the theory, but Head wants this linked to techniques.
When it comes to the cash flows students must think about the amount and timings. Also, study and understand risk, he said. Ultimately, all exam sitters have to reflect on what a financial manager would do.
The one word he would use to help students pass is ‘reflection’. It is important for students to learn to do this. They have to know where they made mistakes and the areas where they are weak. Head understood that we all live in a hectic world and that students might find this difficult, but it is an important part of being an accountant.
PQs really must practise past questions if they want to succeed. What about preparing your own revision cards, he suggested. Planning written answers will also help you in the exam hall – so long as you write legibly. “Remember, a key skill of any accountant is to communicate,” he said. In the exam itself, Head pointed out that sitters should include all their workings and label things clearly.
Islamic finance has been added to the F9 syllabus at the knowledge and comprehension level. That means you will be asked to ‘compare and contrast’. But, apart from that, everything remains as it was.

MEET THE EXAMINER: Antony Head is a principal lecturer at Sheffield Business School and has taught there for 18 years. He has been examiner for P9 Financial Management since 2002. He is co-author of Corporate Finance: Principles and Practice.

source – PQ Magazine
https://www.pqaccountant.com/

best of luck with exam!
ansi