Technical articles and topic explainers

A library of articles and bite-sized videos to help you improve your understanding of areas you find more difficult or develop a broader insight into the subject.

Note: The volume of technical articles does not reflect syllabus coverage within an exam. 

Discuss the role and purpose of the financial management function (A)

Assess and discuss the impact of the economic environment on financial management (B)

Interest rates
Several areas of the FM syllabus require either annualising or short-term pro-rating of percentage figures. There are two alternative approaches for this and the approach chosen can affect calculations in questions on these areas of the syllabus. This article explains these approaches and clarifies ACCA’s preferred approach.

Discuss and apply working capital management techniques (C)

Working capital management
This article covers the foundations of working capital management, a core area of the Financial Management syllabus, and focuses on the analysis of current assets and current liabilities. The topic can form part, or the whole of, a 20-mark question in the exam, as well as being examined by objective test questions.

Accounts receivable management
Section C2d) of the Financial Management Study Guide states that candidates should be able to ‘discuss, apply and evaluate the use of relevant techniques in managing accounts receivable’.

Management of foreign accounts receivable
This article focuses on foreign accounts receivable, which present some additional challenges to a business that are not present with domestic-based customers.

Receivables collection
This article considers two methods a company could adopt in order to speed up the collection of cash from its customers.

Topic explainer video: Accounts receivables management                               In this video, expert tutor Milind Date unpacks the topic of 'Accounts receivables management - analysing debt factor ' (YouTube). 

Topic explainer video: Working capital management                                        In this video, expert tutor Milind Date unpacks the topic of 'Working capital management' (YouTube). 

Carry out effective investment appraisal (D)

Inflation and investment appraisal
This article discusses the nominal terms and real terms approaches to investment appraisal using the net present value method, and also considers the impact of taxation in the context of these approaches. This is an area of the syllabus where mistakes are often made by unprepared candidates.

Equivalent annual costs and benefits
The calculation of equivalent annual costs is a tool that can be used by companies to assist in asset replacement decisions.

Advanced investment appraisal
Investment appraisal is one of the core topics within Financial Management and it is a topic which has been well represented in the Financial Management exam.

 

Identify and evaluate alternative sources of business finance (E)

Dividend theory
Dividends and share price growth are the two ways in which wealth can be provided to shareholders. This article looks at some theories on dividend payments, as well as the practical matters that have to be taken into account and a discussion on dividend policies.

The capital asset pricing model – part 1
In the first of a three-part series of articles, we consider the CAPM and its components, shows how it can be used to estimate the cost of equity, and introduces the asset beta formula.

The capital asset pricing model – part 2
This article describes how to apply the CAPM when calculating a project-specific discount rate to use in investment appraisal.

CAPM: theory, advantages, and disadvantages
In the final article in his three-part series, we look at the theory, advantages and disadvantages of CAPM.

Business finance for SMEs
Also available as a podcast on iTunes
In this article, we consider potential finance sources that an SME could use, with a particular focus on the more modern sources of crowdfunding and supply chain financing.

Analysing the suitability of financing alternatives
This article suggests an approach for students to apply to a key area of the Financial Management syllabus before finishing with a worked example to demonstrate the technique discussed.

Introduction to Islamic finance
This article takes a look at Islamic finance, which has just been introduced to the Financial Management syllabus.

Business finance
Section E of the syllabus deals with business finance. This article covers types of finance, sources of finance and mix of finance.

Cost of capital, gearing and CAPM – part 1
A fundamental part of financial management is investment appraisal: into which long-term projects should a company put money? This is the first part of the article that looks at how a suitable discount rate can be calculated.

Cost of capital, gearing and CAPM – part 2
A fundamental part of financial management is investment appraisal: into which long-term projects should a company put money? This is the second part of the article that looks at how a suitable discount rate can be calculated.

Optimum capital structure
Is it possible to increase shareholder wealth by changing the capital structure

Topic explainer video: Specific Cost of Capital - Betas
In this video, expert tutor Jo Tuffill unpacks the topic of 'Specific cost of capital' (YouTube). 

Topic explainer video: Weighted Average Cost of Capital
In this video, expert tutor Rashaad Hussain unpacks the topic of 'Weighted Average Cost of Capital ' (YouTube). 

Topic explainer video: Debt vs Equity and effect on financial position
In this video, expert tutor Tze Kang unpacks the effect on financial position of issuing debt or equity. (YouTube).

Discuss and apply principles of business and asset valuations (F)

Behavioural finance
(listen to the podcast)
This article briefly looks at what behavioural finance is and some important terms related to behavioural finance which students should know.

Business valuations
This article discusses the three broad approaches to business valuations – assets-based, income-based, and cash flow-based. 

Topic explainer video: Business & asset valuations                                            In this video, expert tutor Jo Tuffill unpacks the topic of 'Business & asset valuations - Equity vs Debt' (YouTube). 

Explain and apply risk management techniques in business (G)

Interest rates
Several areas of the FM syllabus require either annualising or short-term pro-rating of percentage figures. There are two alternative approaches for this and the approach chosen can affect calculations in questions on these areas of the syllabus. This article explains these approaches and clarifies ACCA’s preferred approach.

Hedging techniques for interest rate risk
This article looks at Section G of the Financial Management Study Guide relating to the management of interest rate risk.

Foreign currency risk and its management
A focus on the three types of currency risk – economic risk, translation risk and transaction risk.

Topic explainer video: Foreign currency risk - external hedging                          In this video, expert tutor Jo Tuffill unpacks the topic of 'Foreign currency risk - external hedging ' (YouTube). 

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