F9 - ACCA Exams December 2009 from BPP

• Working capital: this has always been a favourite theme; questions on inventory management and receivables management are likely here. Make sure that you are comfortable with calculating the operating cycle and explaining the concept of over-trading.
• Investment decisions: this exam normally contains a question involving net present value (NPV), often with tax and inflation; discounted cash flow techniques can also be applied to asset replacement, capital rationing and leasing as well and one of these areas could well be tested this time. Remember that you may need to calculate a weighted average cost of capital before you calculate an NPV.
• Sources of finance: this is a topical area, we would expect a part question on financing problems covering gearing issues and problems for small-medium sized companies. Ratio analysis is likely to feature here.
• Business Valuations: this area is commonly tested and is a core syllabus area. You should note that in recent sittings the examiner has looked to combine 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.
• Make sure that you are also able to value debt. Finally, you need to be able to explain the efficient markets hypothesis – recent stock market volatility casts doubt on the ability of stock markets to price securities in a rational way.
• Financial environment & Risk management: recent exchange rate and interest rate volatility could impact on a company’s financial management plans – a part question on this area could be set, with further discussion and calculations on hedging techniques.