ACCA P4 Advanced Financial Management (AFM)
Advanced Financial Management (AFM) is the twelfth exam of your ACCA journey. Advanced Financial Management is also an optional exam. There are four optional exams in the ACCA professional level, Advanced Financial Management, Advanced Performance Management, Advanced Taxation, Advanced Audit and Assurance, students will be required to choose any two optional subjects.
Advanced Financial Management (AFM) will build upon your earlier studies and focus more on advanced financial management techniques. The aim of this exam is to learn and apply advanced financial knowledge in a professional manner to help organizations take financing decisions. NCFM Academy Hyderabad is a leading ACCA Institute in Hyderabad Ameerpet provides ACCA P4 Advanced Financial Management paper.
The syllabus is assessed by a three hour and fifteen minutes examination.
Section A will always be a single 50 mark case study, which will contain four professional marks in which candidates are required to produce a business document such as a report or a briefing paper for the board of directors.
Candidates should understand that they will be expected to undertake calculations, draw comparisons against relevant information where appropriate, analyze the results and offer recommendations or conclusions as required. Financial managers are required to look across a range of issues which affect an organization and its finances, so candidates should expect to see the case study focus on a range of issues from at least two syllabus sections from
A – E. These will vary depending on the business context of the case study.
Section B will consist of two compulsory 25 mark questions. All section B questions will be scenario-based and contain a combination of calculation and narrative marks. There will not be any wholly narrative questions. All topics and syllabus sections will be examinable in either section A or section B of the exam, but every exam will have a question(s) that have a focus on syllabus sections B and E.
Syllabus of ACCA P4 Advanced Financial Management
The syllabus is divided into five sections with further sub-sections
A- Role of a senior financial adviser in the multinational organization
This is the first section of this course and it goes over the role of a senior financial adviser in the multinational organization. Students will learn about the role and responsibility of senior financial executives and advisors in an organization. Their responsibility to formulate a financial strategy for the organization and the different ethical and governance issues they have to deal with along with managing stakeholder relations.
This section will also cover the responsibility of a senior financial advisor to manage international trade and finance for an organization. Students will need to have an understanding of major trade agreements, common markets and the role of global organizations such as WTO, World Bank, and IMF. Students will need to have an understanding of the global economy and the effect of events and developments on the macroeconomic environment and the organization.
Students will learn about strategic business and financial planning for multinational organizations and for this they will need to develop their understanding of how to development of a financial planning framework for a multinational organization. Students will also need to understand how to determine a multinational corporation’s dividend policy given its capital structure and also develop an understanding of the transfer pricing for transporting goods across international borders.
B- Advanced investment appraisal
This is the second section of this course and it covers advanced investment appraisal in detail. This section will revisit discounted cash flow techniques and introduce the effect of inflation and taxation on the net present value of projects. Monte Carlo simulation model will also be introduced but students will only be required to have an understanding of the concept and not its calculation.
Students will revisit the internal rate of return and will be introduced to a modified internal rate of return (MIRR). Black and Scholes option pricing theory will be introduced and students will be required to understand and calculate it, students will be required to evaluate options and real options.
This section will also build upon your earlier studies and students will be required to calculate the cost of debt and cost of capital using CAPM, dividend growth models and WACC method.
Students will be required to understand the exposure of debt to the interest rate changes using Macaulay’s duration. The concept of valuation and the usage of free cash flows will also be introduced and the students will also need to have an understanding of international investment and financing decisions.
C- Acquisitions and mergers
This is the third section of this course and it covers acquisitions and mergers in detail. Students will be required to understand the difference between acquisition and mergers and their appropriateness in different situations.
This section will also cover the financial valuation of acquisitions and mergers. Students will also need to have knowledge of the regulatory framework and processes which impact acquisitions and mergers and the different issues which arise with regards to regulations during an acquisition. This section will also cover the financing decisions for acquisitions and mergers, students will need to have an understanding of the appropriate means of finance for the process.
D- Corporate reconstruction and reorganization
This is the fourth section of this syllabus and it covers corporate reconstruction and reorganization. Students will be required to have an understanding of situations where reconstruction is appropriate and where it is not and the likely impacts on the financial position of the company.
Students will also need to understand situations where business reorganization is needed and the financial issues relating to a management buy out and buy-ins.
E- Treasury and advanced risk management techniques
This is the fifth section of this course and it covers the treasury function and advances risk management techniques. Students will learn about the role of treasury function in multinationals and the short and long term financial management including value maximization and risk exposure.
Students will also learn the use of financial derivatives to hedge against FOREX and interest rate risk
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