ACCA F9: Where To Focus

Exam Tips – where to focus

With less than a  month to go until the ACCA F9 exam you’re probably thinking where you should focus your studies to maximise your chances of success, passing the exam is what it’s all about.

So what’s going to come up in the exam?

This is a question I get asked regularly on courses. I can understand where students are coming from – especially due to time constraints, what’s the point in spending loads of time revising topics if they’re not going to be tested?  You want to focus your precious time on areas that are likely to be tested.

Unfortunately I always give students the answer that they need to hear, rather than the answer that they want to hear.

If you look at the last three post exam reports the message from the examiner is quite clear:

December 2011

“Candidates who were well prepared and who had studied all parts of the syllabus did well on this paper. Candidates who were not successful may have focused on a small number of topic areas, hoping to gain most of their marks there… It has been said in previous F9 Examiner Reports that each examination paper covers many areas of the syllabus, so concentrating on one or two parts of the syllabus and giving less attention to other parts will decrease the likelihood of success.”

June 2011

“The Examination paper looked at many areas of the syllabus… Successful candidates answered all four compulsory questions and had prepared well for the examination. Candidates who were not successful tended to have omitted  answers to some parts of the questions, and showed in their answers that there were some parts of the F9 syllabus that they needed to study further. Since many areas of the syllabus are covered in each examination paper, concentrating on one or two parts of the syllabus and not giving enough attention to other parts will decrease the likelihood of success.”

December 2010

“Successful candidates demonstrated their wide understanding of the F9 syllabus, since the examination paper covered many aspects of the syllabus.”

My take on things

I don’t have a crystal ball & I don’t hang out with Anthony Head (F9 Examiner) so I can’t say for certain what he has lined up for the next exam. What I do know though is that in the past he has said that he will test across all syllabus areas and he has been true to his word. Breadth of knowledge (across the whole syllabus) is more important that depth of knowledge (on one or two topics).

In most F9 exams there can at least 20 marks going for pure knowledge, which come in the form of a written requirement. If you have covered these topics in your revision you will find that these are the easiest marks to get in the entire paper as you don’t even have to think – all you need to do is reproduce the relevant sections from your course notes.

If you haven’t covered these topics you may struggle. Unfortunately there is no way of telling which syllabus areas will be tested in this format.

Application Marks

These can account for a significant amount of the marks in the exam and will test if you fully understand various techniques. You will have to adapt information provided in scenarios to produce calculations or form discussion.

I would guess there is a fair chance that the following areas could be tested: –

Sources of finance: Potentially financing problems covering gearing issues and problems companies may face raising finance. Ratio analysis is likely to feature here with discussion of the numbers calculated.  Ensure you are comfortable with the different sources of finance & how key ratios such as gearing and interest cover may change after new finance has been raised. Islamic Finance was new on the syllabus for the June 11 exam but has not yet been tested. It is possible it may come up in Jun 2012, though if it does, it should be straightforward knowledge for a few marks only.

WACC: – any element of the WACC could be tested, including cost of equity, preference shares & different types of debt, along with their corresponding market values & then putting all of this together to calculate the WACC.

Investment decisions: the exam normally contains a question involving calculation of a net present value (NPV), often with tax and inflation. In order to discount the NPV, you may be asked to first calculate a weighted average cost of capital (see above).

Working capital: questions on inventory management and receivables management are likely. Ensure that you are comfortable with working capital ratios as you may have to be able to put these in reverse.

Business Valuations: You may have to combine different syllabus areas within the same exam question – for example calculating a cost of equity (using CAPM) and then using it in the dividend growth model to value a company.

Exchange rate risk – Techniques for managing exchange rate risk, including money  market hedges & forwards.

If I just revise the above topics will that be enough to get a pass?

Probably not, as mentioned above it is most important that you have a good breadth of knowledge across the whole syllabus, but if you were to expand your depth of understanding on certain areas I would prioritise the above areas as they are more likely to be tested by way of application.

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