Technical articles

Technical articles

Incremental cash flows
Reference E3(d) of the FFM study guide requires candidates to be able identify/evaluate relevant cash flows for investment decisions. The identification of relevant cash flows is also examined in higher level papers.

Payback and discounted payback
Recent Paper FFM exam sittings have shown that candidates are not studying payback in sufficient depth or breadth to answer exam questions successfully. This article aims to help candidates with this.

The internal rate of return
Paper FFM candidates need to be able to perform the IRR calculation, as well as explain the concept of IRR, how it can be used for project appraisal, and to consider the merits and problems of this method of investment appraisal. Candidates have historically not performed well when this topic has been examined, and this article provides a sound grasp of the concept, the calculations, and the advantages and disadvantages of IRR.

Relevant cash flows
This article explains the principles behind relevant cash flows, as well as identifying/calculating such cash flows, possibly for further use within an investment appraisal calculation. This will help candidates understand these elements.

Credit policy
This article aims to demonstrate how, with a logical approach, candidates can deal with calculations that involve a change in receivables collection policy or payables payment policy.

Inventory control
The two approaches for inventory control.

Short-term decision making
This article covers some of the issues arising in the area of short-term decision making.

Interest rates and early settlement discounts
The difference between simple and compound interest, and how to make use of this knowledge to understand early settlement discounts.

Factoring and invoice discounting
The concepts of factoring and invoice discounting.

The discounted cash flow internal rate of return
How and when to use the internal rate of return (IRR) formula in capital investment appraisal.

Capital investment appraisal
Capital investment appraisal using discounted cash flow.

Projected cash flow statements
A look at alternative approaches to preparing a projected cash flow statement.

Cleared funds forecasts
The need for cleared funds forecasts and provides a worked example.

Stock control
The theory and the practicality of stock management and control.

Selecting sources of finance for business
The practical issues facing a business when selecting appropriate sources of finance.

Exam technique

Approach to the new style Foundations in Financial Management exam
December 2019 will be the first Foundation in Financial Management (FFM) exam of the new syllabus and the first ever computer based FFM exam. This article aims to brief candidates as to what to expect as the exam moves to CBE and on the functionality of computer software they will use in the exam.

How to answer multiple-choice questions
Answering MCQs successfully requires you to develop a range of skills and exam techniques. Taking the steps set out in this article will help you to maximise your marks.

Computer-based exams
This article considers the benefits of computer-based exams (CBEs), highlights the points that you need to be aware of when completing ACCA's current CBEs, and looks at the different types of questions.

Five steps to multiple-choice success
A five-step approach to answering multiple-choice questions.

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