The topic areas covered by each question are not fixed and all areas of the syllabus are examinable as stated in the examiner’s approach. Therefore, it is pretty difficult to spot with only TWO past year and a pilot paper (Ie, NPV in D07 is in Q2 while NPV in J08 – Q4).
so here it goes, according to the Syallbus:
A Financial Management function
Came out in J08, shareholder wealth maximisation.
B Financial management environment
Earnings per share in Pilot.
For section A & B, marks are minimum and the examiner puts less focus here (but in paper 2.4, these are major theory areas.)
C Working Capital Management
1. Receivables & EOQ has been a favourite (both in J08 & D07 even in Pilot).
2. so the question is will it be out again?? if it does, areas not yet examined are:
- Compare factoring & current
- Managing foreign accounts receivable]
3. but, i feel, yes, it’s just a feel :
- Cash operating cycle
- Accounting ratios
- payable discount
- Cash management – Baumol
4. Pilot paper Q3.
D Investment Appraisal
1. Another favourite part – NPV & IRR.
2. This time might, possibly :
- Calculate sensitivity
- Leasing & Borrowing
- Equivalent annual cost
- CAPITAL RATIONING
E Business Finance
1. Gearing – problems of high & financial risk(ratio)
2. Methods of raising EQUITY finance – rights issue, placing, public offer…
F Cost of Capital
1. CAPITAL ASSET PRICING MODEL (CAPM) – theory & ungear then gear calculation.
2. know how to calculate cost of capital of a range of capital instruments :
- irredeemable debt
- redeemable debt – pilot
- convertible debt – J08
- preference shares – Pilot
- Bank debt – J08
3. Calculate WACC
4. Miller And Modigliani
G Business Valuation
1. Favourite – P/E ratio method, Dividend valuation model & growth model AND Efficient market hypothesis (weak, semi-strong & strong
2. Asset-based valuation models
H Risk Management
1. Pilot paper Q2!
2. Interest rate risk – (has never been out)
3. Hedging!
.
Not so much of a tips is it? well, that’s the thing about F9. there is notihing to spot or focus as all is examinable.
but if it’s a desperate situation, no guarantees though :
Question 1
1. CAPM – calculate WACC – with gear & ungear
2. CAPM theory, advantages & disadvantages
3. Gearing
4. Miller & Modigliani
Question 2
1. Risk management – foreign currency risk – types, fluctuations(inflation) & hedging
2. interest rate risk & fluatuation
Question 3
1. Cash operating cycle
2. Ratios – calculate & comment
3. Baumol model with EOQ
Question 4
1. calculate NPV – Leasing & borrowing to buy
2. ARR
3. Equivalent annual cost
4. Capital rationing – Profitability index & non-divisible or divisible investment
.
Practice past year questions & use study guide as index to cover the syllabus.
THEORY plays a significant marks allocation for this paper.
Resources : PYQ (2.4 & F9), examiner’s approach, SA magazine, study guide & examiner report & lots of judgement & feeling…
