ACCA Financial Management

Sources of finance and cost of capital

• Criteria for choosing between sources of finance.
• Sources of finance and their features.
• Models on calculation of cost of equity.
• Formula on calculation of weighted average cost of capital.
• Capital asset pricing model and its application.
• Short- and long-term Islamic finance.

Capital structure and business valuation

• Three types of risks: business risk, operating gearing and financial gearing.
• Financial ratios on capital structure, their calculation and explanation.
• Theories on capital structure.
• Homework. Q&A session.

• Dividend policy and task on applying it.
• Two types of beta and their application in calculation of the cost of capital.
• Three approaches to business valuation their application.
• Formulas on valuation of preference shares and different types of debt.
• Efficient market hypothesis.
• Homework, Q&A session.

Working capital management

• Working capital. Objective and approaches of its management.
• Overcapitalization and overtrading. Working capital management ratios.
• Evaluating efficiency of working capital management.
• Inventory control, challenges and tools of inventory management.
• EOQ model (Economic Order Quantity) apploication.

Working capital management

• Accounts receivable and payable management: policies and tools.
• Calculation of costs of financing accounts receivable, on early settlement discounts, factoring.
• Cash and funding strategies.
• Application of Baumol and Miller-Orr models.
• Cash flows forecasting.
• Homework, Q&A session.

• Foreign and interest risk management
• Foreign exchange risk. The causes of exchange rate fluctuations – four-way equivalence.
• Using four-way equivalence in exam questions.
• A money market hedge and its application.
• Foreign currency derivatives.
• Interest rate risk. Yield curve and three theories explaining its shape.
• Tools of hedging interest rate risk and tasks on applying them.
• Homework, Q&A session.

Mock exam check and explanation

• Explanation of solutions.
• Recommendations on presenting answers.
• Q&A session.