Financial Management (FM)

Develop the knowledge and skills expected of a finance manager in relation to investment, financing, and dividend decisions.

Skill Level Essential Paper Global Pass Rate: 45%
Financial Management

About FM

Financial Management (FM) develops the knowledge and skills expected of a finance manager, focusing on investment, financing, and dividend policy decisions.

FM builds on your knowledge from the Management Accounting (MA) exam and provides the key financial management techniques required to support management in making strategic business decisions. You'll learn how to analyze financial statements, evaluate investment opportunities, manage working capital, and make financing decisions.

Why FM is Important

FM is essential for anyone pursuing a career in finance, accounting, or business management. It provides the technical knowledge and analytical skills needed to:

  • Make strategic investment and financing decisions
  • Manage working capital effectively
  • Evaluate business and financial risk
  • Understand the impact of economic environment on business

Exam Details

Duration: 3 hours
Pass Mark: 50%
Availability: March, June, September, December
Format: Computer-based exam
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FM Syllabus Areas

Financial Management Function

  • The nature and purpose of financial management
  • Financial objectives and relationship with corporate strategy
  • Stakeholders and impact on corporate objectives
  • Financial and other objectives in not-for-profit organizations
  • Economic environment for business

Working Capital Management

  • The nature, elements, and importance of working capital
  • Management of inventories, accounts receivable, and payable
  • Cash flow forecasting and treasury management
  • Working capital funding strategies
  • Working capital investment and financing policies

Investment Appraisal

  • Investment appraisal techniques (NPV, IRR, Payback, ARR)
  • Allowing for inflation and taxation in DCF
  • Adjusting for risk and uncertainty in investment appraisal
  • Specific investment decisions (lease or buy, asset replacement)
  • Project appraisal and capital rationing

Business Finance

  • Sources of, and raising, business finance
  • Estimating the cost of capital (WACC)
  • Sources of finance and their relative costs
  • Capital structure theories and practical considerations
  • Finance for small and medium-sized entities (SMEs)

Business Valuations

  • Nature and purpose of the valuation of business
  • Asset-based valuation models
  • Income-based valuation models (DCF, earnings yield)
  • Cash flow-based valuation models
  • Market-based valuation models (P/E ratio)

Risk Management

  • The nature and types of risk and approaches to risk management
  • Causes of exchange rate differences and interest rate fluctuations
  • Hedging techniques for foreign exchange risk
  • Hedging techniques for interest rate risk
  • Enterprise risk management

Professional Skills Developed

Financial Analysis

Ability to analyze financial statements and performance indicators

Investment Appraisal

Skills to evaluate investment opportunities using various techniques

Financing Decisions

Ability to make appropriate financing decisions for businesses

Working Capital Management

Skills to manage working capital effectively and efficiently

Risk Management

Ability to identify and manage financial risks

Strategic Decision Making

Skills to support strategic business decisions with financial analysis

Start Your FM Journey Today

Master financial management techniques with our comprehensive FM course

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