DETAILED SYLLABUS

A. Financial management function

• 1. The nature and purpose of financial management
• 2. Financial objectives and relationship with corporate strategy
• 3. Stakeholders and impact on corporate objectives
• 4. Financial and other objectives in not-for-profit organisations

B. Financial management environment

• 1. The economic environment for business
• 2. The nature and role of financial markets and institutions

C. Working capital management

• 1. The nature, elements and importance of working capital
• 2. Management of inventories, accounts receivable, accounts payable and cash
• 3. Determining working capital needs and funding strategies

D. Investment appraisal

• 1. The nature of investment decisions and the appraisal process
• 2. Non-discounted cash flow techniques
• 3. Discounted cash flow (DCF) techniques
• 4. Allowing for inflation and taxation in DCF
• 5. Adjusting for risk and uncertainty in investment appraisal
• 6. Specific investment decisions (lease or buy; asset replacement, capital rationing)

E. Business finance

• 1. Sources of, and raising short-term finance
• 2. Sources of, and raising long-term finance
• 3. Internal sources of finance and dividend policy
• 4. Gearing and capital structure considerations
• 5. Finance for Small and Medium-size Entities (SMEs)

F. Cost of capital

• 1. Sources of finance and their relative costs
• 2. Estimating the cost of equity
• 3. Estimating the cost of debt and other capital instruments
• 4. Estimating the overall cost of capital
• 5. Capital structure theories and practical considerations
• 6. Impact of cost of capital on investments

G. Business valuations

• 1. Nature and purpose of the valuation of business and financial assets
• 2. Models for the valuation of shares
• 3. The valuation of debt and other financial assets
• 4. Efficient market hypothesis (EMH) and practical considerations in the valuation of shares

H. Risk management

• 1. The nature and types of risk and approaches to risk management
• 2. Causes of exchange rate differences and interest rate fluctuations
• 3. Hedging techniques for foreign currency risk
• 4. Hedging techniques for interest rate risk

The syllabus is assessed by a three-hour paper based examination consisting of four compulsory 25-mark questions. All questions will have computational and discursive elements. The balance between computational and discursive content will continue in line with the pilot paper. Candidates are provided with a formulae sheet and tables of discount and annuity factors.