ACCA Exam Tips December 2009 (F9)

Paper F9 (PQ Magazine)

Economic environment and the impact on interest and exchange rates.

Working capital management – EOQ with discounts and lead time buffer stock.

Management of trade receivables, including settlement discounts and factoring.

Asset replacement cycles and capital rationing.

Risk management of foreign currency using internal and external hedging techniques.

Weighted average and marginal costs of capital and the CAPM.

Business valuations using geared betas and earnings based valuations.

Inventory management.

Complex NPV or IRR with tax.

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ACCA Paper F9 December 2009 Exam tips (OpenTuition)

Question 1
Weighted average cost of capital with CAPM / calculating an asset beta from an equity beta

Question 2
Forecasting future exchange rate (purchasing power parity) / management of exchange rate risk (forward contracts and money markets) / written on managing interest rate risk

Question 3
NPV question - probably Capital Rationing / written on limitations

Question 4
Management of receivables / calculation and comment on some ratios

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Paper F9 (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.

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Source:-
PQ Magazine
OpenTuition
BPP

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