F9 Study Text Financial Management ACCA

[Pages:545]Publishing

F9 Study Text Financial Management

ACCA

ACCA

Paper

F9

Financial management

Welcome to Emile Woolf`s study text for Paper F9 Financial management which is: Written by tutors Comprehensive but concise In simple English Used around the world by Emile Woolf Colleges

including China, Russia and the UK

Publishing

Third edition published by Emile Woolf Publishing Limited Crowthorne Enterprise Centre, Crowthorne Business Estate, Old Wokingham Road, Crowthorne, Berkshire RG45 6AW Email: info@

? Emile Woolf Publishing Limited, April 2011

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, without the prior permission in writing of Emile Woolf Publishing Limited, or as expressly permitted by law, or under the terms agreed with the appropriate reprographics rights organisation.

You must not circulate this book in any other binding or cover and you must impose the same condition on any acquirer.

Notice Emile Woolf Publishing Limited has made every effort to ensure that at the time of writing the contents of this study text are accurate, but neither Emile Woolf Publishing Limited nor its directors or employees shall be under any liability whatsoever for any inaccurate or misleading information this work could contain.

British Library Cataloguing in Publications Data A catalogue record for this book is available from the British Library.

ISBN: 978-1-84843-147-8

Printed and bound in Great Britain

Acknowledgements The syllabus and study guide are reproduced by kind permission of the Association of Chartered Certified Accountants.

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Contents

Syllabus and study guide Chapter 1: The financial management function Chapter 2: The financial management environment Chapter 3: Working capital management Chapter 4: Management of working capital: inventory control Chapter 5: Management of receivables and payables Chapter 6: Cash management Chapter 7: Introduction to investment appraisal and capital investment

decisions Chapter 8: Discounted cash flow Chapter 9: DCF: taxation and inflation Chapter 10: DCF: risk and uncertainty Chapter 11: Capital investment appraisal: further aspects Chapter 12: Sources of equity finance Chapter 13: Sources of finance: debt capital Chapter 14: Capital structure Chapter 15: Finance for small and medium sized entities (SMEs) Chapter 16: Cost of capital Chapter 17: Capital asset pricing model (CAPM) Chapter 18: Business valuations Chapter 19: Foreign exchange risk

Page 1 13 37 55 77 95

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137 153 179 193 207 221 245 257 265 275 303 325 357

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Paper F9: Financial management

Chapter 20: Interest rate risk Answers to exercises Practice questions Answers Appendix Index

Page 397 433 443 475 523 527

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Syllabus and study guide

Aim

To develop the knowledge and skills expected of a financial manager, relating to issues affecting investment, financing, and dividend policy decisions.

Main capabilities

After completing this examination paper students should be able to:

A Discuss the role and purpose of the financial management function B Assess and discuss the impact of the economic environment on financial

management C Discuss and apply working capital management techniques D Carry out effective investment appraisal E Identify and evaluate alternative sources of business finance F Explain and calculate cost of capital and the factors which affect it G Discuss and apply principles of business and asset valuations H Explain and apply risk management techniques in business

Rationale

The syllabus for Paper F9, Financial Management, is designed to equip candidates with the skills that would be expected from a finance manager responsible for the finance function of a business. The paper, therefore, starts by introducing the role and purpose of the financial management function within a business. Before looking at the three key financial management decisions of investing, financing, and dividend policy, the syllabus explores the economic environment in which such decisions are made.

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Paper F9: Financial management

The next section of the syllabus is the introduction of investing decisions. This is done in two stages ? investment in (and the management of) working capital and the appraisal of long-term investments. The next area introduced is financing decisions. This section of the syllabus starts by examining the various sources of business finance, including dividend policy and how much finance can be raised from within the business. Cost of capital and other factors that influence the choice of the type of capital a business will raise then follows. The principles underlying the valuation of business and financial assets, including the impact of costs of capital on the value of business is covered next. The syllabus finishes with an introduction to, and examination of, risk and the main techniques employed in the management of such risk.

Relational diagram of main syllabus capabilities

Financial management function (A)

Financial management environment (B)

Working capital management (C)

Investment appraisal techniques (D)

Sources of business finance (E)

Cost of Capital (F)

Risk management (H)

Business valuations (G)

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