F9 Exam tips from BPP, Kaplan, First Intuition, Icount, ATC, EXP – Dec 2011 sitting

BPP

Important areas to cover:
WACC: – any element of the WACC could be tested, including cost of equity, preference shares & different types of debt, along with their corresponding market values & then putting all of this together to calculate the WACC.
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 (see above)
Working capital: questions on inventory management and receivables management are likely. Ensure that you are comfortable with working capital ratios as you may have to be able to put these in reverse
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. Islamic Finance was new on the syllabus for the June 11 exam but was not tested. It is possible it may come up in Dec 11, though if it does, it should be straightforward knowledge for a few marks only.
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.

Kaplan tips

Investment appraisal
The most common technique assessed is NPV with inflation and taxation although be prepared for a twist.
Working Capital Management
It’s been a while since we’ve seen the more numerical aspects surrounding receivables management or the models for cash management.
Risk Management
Foreign exchange risk has been examined more often than interest rate risk. However, both are fairly under-examined areas of the syllabus as a whole and so this is a topic worth being on top of.

First Intuition

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

Icount

•Net Present Value
•Working Capital Management
•Types of finance and WACC – change in Business Risk
•Analysing performance – financial & non financial measures
•PE and DVM valuations

ATC

The examiner identifies eight key areas of the syllabus:
• role of the financial management function
• impact of the economic environment on financial management
• working capital management
• investment appraisal
• alternative sources of business finance
• cost of capital
• business and asset valuations
• foreign exchange and interest rate risk management
The exam consists of four compulsory 25-mark questions. All questions will have computational and discursive elements. The examiner tries to test as much of the syllabus as possible, often combining several topics within one question. Hence candidates must have solid knowledge of all the topics listed above.
Candidates are provided with a formulae sheet and tables of discount and annuity factors. Candidates should bring a scientific calculator to the examination. It is essential to carefully work through the Pilot Paper and the December 2007 – June 2011 exams to become familiar with the style, time pressure and level of difficulty.
The examiner has written four articles in the Student Accountant magazine – “Capital Asset Pricing Model (parts 1-3)” and “Market matters”. In March 2009 an article called “Being an angel” appeared and, although shown on the ACCA website under the link to paper P4 Advanced Financial Management, is arguably more relevant to the paper F9 syllabus which specifically refers to finance for SME’s.
The September 2009 article “Receivables collection” focuses on the commonly tested topics of settlement discounts and debt factoring. Other key articles include “Advanced investment appraisal” (October 2010) and “Foreign exchange risk and its management” (July 2010). Islamic finance was added to the syllabus from June 2011 and has yet to be examined – ensure you read, summarize and memorize the March 2011 article on this topic. All these articles can be downloaded from the ACCA website. If you seek further insights into the examiner’s mind you could consider his book “Corporate Finance – Principles and Practice” (Denzil Watson and Antony Head). However your exam preparation should focus on question practice.

Exam Tips
• The Miller-Orr model and Baumol model
• IRR
• Islamic finance (for more detail refer to the March 2011 Student Accountant article)
• SME finance (for more detail refer to the September 2001 article “Business finance and the SME sector”)
• Rights issues
• Equity valuation
• Interest rate risk

Exam Technique
• Attempt all parts of all questions
• Allow yourself 45 minutes per question and allocate you time carefully between the requirements
• Do not try to pass the exam by only performing calculations (or by only making discussion)
• In calculations show your workings and write your assumptions
• When asked to comment upon your calculations do not be afraid to do so even if you think your calculations contain errors – you can still get maximum marks for comments. If you could not perform the required calculation then write an assumed result and comment upon that.
• Structure your comments using sub-headings and bullet points (but write a full sentence after each bullet).
• Give real life examples where appropriate to support your comments – extra marks may be awarded
• Keep your presentation clear

EXP

• Using the Dividend Valuation Model;
• Working capital management calculations;
• The impact of gearing on the cost of equity;
• Calculating the cost of redeemable and irredeemable debt;
• The definition of Free Cash Flow;
• Calculating written down allowances and taxation effects;
• Calculating the value of a right (rights issues);
• Comparing leasing vs. borrowing alternatives;
• Understanding treasury hedging techniques using derivatives;
• Basic familiarity with Islamic finance instruments

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

best of luck with exam!
ansi