ACCA F9 FINANCIAL MANAGEMENT REVISION PACK

ACCA F9

FINANCIAL MANAGEMENT

REVISION PACK

, F9: Financial Management

Index

Sr. No. Chapter Name Page No.
1 An Introduction 4
2 The Economic Environment and 6
Financial Markets
3 The Investment Appraisal 11
4 Specific Investing Decision 24
5 Cost of Capital 33
6 Capital Structure and WACC 43
7 Source of Finance 48
8 Business Valuation 59
9 Risk Management 66
10 Working Capital Management 74

, Formulae Sheet

Economic order quantity


2C0D
=
Ch

Miller–Orr Model

1
Return point = Lower limit ×+spread()

3
1
3 × transaction cost× variance of
cashflows 3
Spread = 4
3
interest rate


The Capital Asset Pricing Model
E
( ri ) = R f + βi (E (rm ) – Rf )

The asset beta formula

V V
e d (1 – T)
βa β
(Ve +
V
d (1 –
= (Ve + Vd (1 – T) e+
T
) βd
) )


The Growth Model

D 1 g
Po =
(0 + )

(re – g)
Gordon’s growth approximation


g = bre

The weighted average cost of capital


Ve V
WACC = k + d k 1–T
V +V e V +V d( )
e d

, e d

The Fisher formula

(1 + i) = (1 + r ) (1 + h)
Purchasing power parity and interest rate parity

1 + h 1 + i
S = S× ( c ) F = S× ( c )
1 0 0 0
(1 + hb ) (1+ ib )




13

1[P.T.O.