How to Pass Financial Management ACA ICAEW at the First Attempt!

Summary

In this video, Luke, an ACA-qualified accountant with experience at a Big Four firm and in investment banking, shares expert tips for acing the ACA Financial Management (FM) exam. He emphasizes the importance of practicing the predictable sections, such as NPV calculations and hedging, while not neglecting the narrative and qualitative parts. Luke advises candidates to carefully read questions to avoid autopilot mode and show clear workings for follow-through marks. He also suggests studying FM alongside Business Strategy & Technology (BST) due to the overlap. His final tips stress taking time during the exam to avoid mistakes and boost confidence.

Takeaways

• 😀 Practice is essential for success in the Financial Management (FM) exam. Focus on practicing past papers to familiarize yourself with the structure and format.
• 😀 The FM exam is predictable and well-structured, with three main areas always appearing: NPV and discounted cash flow, hedging, and company valuation and financial structure.
• 😀 Focus on mastering NPV and hedging questions since they are tested in a consistent format, making them a crucial part of your preparation.
• 😀 The company valuation section is more variable, so while practice is important, it's harder to predict exactly what will be tested.
• 😀 Don't neglect the written parts of the exam. While FM is perceived as a math-heavy exam, about 50% of the exam consists of qualitative, discursive questions.
• 😀 Understand and practice writing structured, concise answers for the qualitative questions. Bullet points and clear reasoning are key to performing well.
• 😀 Avoid autopilot mode during the exam. Take the time to read the questions carefully and look out for any subtle twists or variations.
• 😀 Show your workings clearly, especially when performing calculations like NPV or hedging. This allows you to earn follow-through marks if you make any mistakes.
• 😀 Take your time during the exam. The FM exam is not as time-pressured as others, so there's room to carefully think through each question and avoid silly mistakes.
• 😀 Pairing FM with Business Strategy and Technology (BST) for study can be beneficial, as there is significant overlap between the two exams, helping reinforce key concepts.

Q & A

What makes the Financial Management (FM) exam predictable?

The FM exam is highly predictable because it consistently covers three main sections: NPV (Net Present Value) and discounted cash flow, hedging, and company valuation and financial structure. These sections always appear in the same order and format, making it easier to focus your study on key areas.

How can practicing past papers help in preparing for the FM exam?

Practicing past papers allows you to familiarize yourself with the types of questions and the exact format that will appear on the exam. Repetition builds confidence in handling NPV calculations, hedging, and company valuation questions, which are the core areas of the exam.

Why is hedging a key topic in the FM exam?

Hedging is a consistent topic that appears in every FM exam, usually presented with multiple small, tricky calculations. Repeated practice helps you become more comfortable with the various types of hedging questions you might encounter.

What advice does Luke give regarding the written sections of the FM exam?

Luke advises not to neglect the written or qualitative sections of the exam. These sections often account for half of the marks and require clear, structured, and concise answers. Focusing only on the quantitative calculations can lead to failure.

How should you approach the written parts of the FM exam?

For the written parts, it's important to focus on clarity and structure. Break your answers into bullet points or small paragraphs and avoid long prose. Make sure your answers are to the point, as the examiners are looking for concise, reasoned responses.

What does Luke mean by not going on 'autopilot' mode during the exam?

Luke warns against rushing through the exam without fully reading and understanding the question. Even if you've practiced extensively, the exam will often include small twists or nuances in the questions that can trip you up if you're not paying attention.

Why is it important to show your workings during the FM exam calculations?

Showing your workings helps the examiner follow your logic and award you 'follow-through' marks, even if you make a mistake. Clearly labeling each step of your calculation ensures that the examiner can see how you arrived at your answer.

What should you focus on when preparing for the MPV (Net Present Value) section of the FM exam?

When preparing for the MPV section, you should focus on practicing as many MPV calculations as possible. Understanding the mechanics of discounted cash flow computations is crucial, as it will be a major part of the exam.

What is the recommended strategy for handling time during the FM exam?

Luke recommends taking your time during the FM exam. It’s not a time-pressured exam, so there’s no need to rush. Carefully read the questions, plan your answers, and take a breather between questions to avoid making mistakes.

How can studying Financial Management (FM) with Business Strategy and Technology (BST) benefit you?

Studying FM and BST together is beneficial because there is a lot of overlap between the two exams. FM is more quantitative, while BST is more qualitative, and combining them helps reinforce your understanding of both areas.