Examiner approach

Relevant up to, and including, the June 2016 exam session

This article explains the approach to examining F9, Financial Management, and clarifies any uncertainty regarding the content of the syllabus. For students planning to take this exam, a good place to start is the ACCA website, where the F9 Syllabus and Study Guide, together with the Specimen Exam and its suggested answers can be found.

The aim of F9 is to develop the knowledge and skills expected of a finance manager – in relation to investment, financing, and dividend decisions. The syllabus is designed to equip candidates with the skills that would be expected from a finance manager responsible for the finance function of a business.

From a relational point of view, F9 builds on knowledge gained through studying F2, Management Accounting, and also prepares candidates for further study of financial management in P4, Advanced Financial Management. Students who are exempt from F2 should ensure that they are familiar with its content by referring to its Syllabus and Study Guide.

Syllabus and study guide

The first two sections of the syllabus consider the role and purpose of the finance manager, and the financial management environment. As financial management decisions support the achievement of business objectives, the syllabus explores the link between objectives, strategy, and stakeholders. Financial management decisions are influenced by factors external to the organisation, so the syllabus also considers the impact of government economic policy in key areas such as interest rates and exchange rates, as well as the nature and role of financial markets and institutions.

The next three sections of the syllabus look at working capital management, investment appraisal, and business finance. Managing working capital is a key concern of the finance manager, who must balance the conflicting objectives of profitability and liquidity. Investment decisions constitute one of the three decision areas of financial management, and the finance manager must be able to identify relevant cash flows, and evaluate a proposed investment and its effect on the organisation.

Financing decisions, another of the three decision areas of financial management, are considered in the business finance section of the syllabus. A finance manager must be able to identify and evaluate the most appropriate sources of finance to meet organisational financing needs. One of the key relationships in financial management is that between risk and return, and this section of the syllabus also looks at the cost of capital and the influence of capital structure on the average cost of capital. Candidates must be able to calculate the cost of individual sources of finance and the average cost of organisational finance, and critically discuss whether financing choices can reduce the average cost of capital and thereby increase the value of the organisation as a whole.

The next section of the syllabus looks at business valuation. Candidates must be able to value both financial assets, such as ordinary shares and bonds, and a business as a whole. Evaluation of financial choices is a key theme here and candidates are expected to be able to discuss, as well as apply, a range of valuation methods.

The syllabus then looks at risk management in relation to foreign currency risk and interest rate risk. Candidates should have an awareness of the different types of foreign currency and interest rate risk, and of the possible reasons why these arise. Candidates will need to be able to evaluate and apply both internal and external risk management (hedging) methods, using the methods identified in the syllabus. Note that evaluation of derivative-based hedging methods – such as those using futures, options, and swaps – is not required.

Main capabilities

The main capabilities are described in the syllabus. Candidates who successfully pass the F9 exam will be able to:

  • Discuss the role and purpose of the financial management function
  • Assess and discuss the impact of the economic environment on financial management
  • Discuss and apply working capital management techniques
  • Carry out effective investment appraisal
  • Identify and evaluate alternative sources of business finance
  • Discuss and apply principles of business and asset valuations
  • Explain and apply risk management techniques in business.
  • Demonstrate employability and technology skills.

You will recognise that these capabilities reflect the sections of the syllabus.

Format of the exam

The three-hour exam consists of two sections, A and B, and all questions in the exam are compulsory. An extra 15 minutes of reading and preparation time is given at the start of the exam.

Section A consists of 20 multiple-choice questions and each question is worth two marks.

Section B consists of five questions. The first three questions are worth 10 marks each and the last two questions are worth 15 marks each. Each question in Section B is likely to have both discussion and calculation elements. The balance between discussion and calculation will be similar to the balance in the Specimen Exam. The two 15 mark questions will come from the working capital management, investment appraisal and business finance areas of the syllabus. The topic areas covered by the 10 mark questions are not fixed.

All areas of the syllabus are examinable and no sections of the syllabus should be neglected during study.

Each exam will contain tables of discount factors and annuity factors, together with a formulae sheet, as in the Specimen Exam. Candidates must ensure that they are familiar with the formulae given in the formulae sheet.

The specimen exam

The Specimen Exam illustrates the kind of questions that will be set.

Section A covers the whole syllabus and the multiple-choice questions cover the topics in a random order. The Specimen Exam illustrates the kinds of questions that will be used, as well as the likely balance between calculation and non-calculation questions. The correct answer must be selected from four choices for each question. Since the whole syllabus is covered, no parts of the syllabus can be neglected during study.

Section B contains questions that look in more depth at different areas of the syllabus, in terms of both calculation and discussion.

Question 1 in the Specimen Exam requires, for 10 marks, discussion of the factors that influence the formulation of working capital policy and calculation of the cost or benefit of a bulk purchase discount.

Question 2 requires, for 10 marks, calculation of the value of a company using three different valuation methods and a discussion of the advantages and disadvantages of using the dividend growth model to value company shares.

Question 3 requires, for 10 marks, an explanation of the relationship between exchange rates, interest rates and inflation rates, and calculation of the relative value of a forward market hedge and a money market hedge.

Question 4 in the Specimen Exam requires, for 15 marks, calculation of net present value, internal rate of return and return on capital employed for an investment proposal, and discussion of findings and financial acceptability.

Question 5 requires, for 15 marks, calculation of a share price, capital gearing and weighted average cost of capital, and a discussion of whether changing dividend policy will affect the share price.


In order to pass this exam, candidates should:

  • Clearly understand the objectives of F9, as explained above, and in the Syllabus and in the accompanying Study Guide
  • Read and study thoroughly a suitable financial management textbook or study text
  • Read relevant articles flagged by Student Accountant
  • Practise exam-standard and exam-style questions on a regular basis
  • Be able to communicate their understanding clearly in an examination context.

Written by a member of the F9 examining team