ACCA FM | Day 2 | Past Paper Question Spine Co Sep/Dec 2020 | Dec'24

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Join Sir Rizwan Maniya for Day 2 of the ACCA FM webinar, where he dives deeper into key topics and provides practical solutions to enhance your Financial Management preparation. In this session, you'll learn:
Working Capital: Step-by-step walkthrough of the Plot Co question from Dec 2013
Currency Risk: Insights from Study Hub OTQs to manage risk effectively
Sources of Finance: In-depth analysis of the Spine Co question from Sep/Dec 2020
Free Study Plan: A tailored study plan to help you cover the syllabus efficiently and stay on track
This session is perfect for FM students aiming to excel in their exams with structured preparation and expert guidance. Don’t miss out on these valuable insights!
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Timestamps
00:19 - Introduction to Day 2 of Financial Management Webinar.
02:59 - Overview of revision batch and working capital discussion.
08:18 - Balancing liquidity and profitability is crucial in working capital management.
11:17 - Understanding overtrading and overcapitalization in working capital management.
16:47 - Understand credit limits and debt collection strategies.
19:09 - Effective cash management balances liquidity and opportunity costs.
23:35 - Understanding financing policies in working capital management.
25:50 - Importance of effective payables management for business success.
30:19 - Summary of product ordering and inventory management for Plot Company.
33:46 - Calculating total costs using Economic Order Quantity (EOQ) for inventory management.
39:48 - Early payments can increase finance costs due to reliance on overdrafts.
43:00 - Analyzing payment options and their impact on payables and finance costs.
49:27 - Impact of payables on cash cycle and financial ratios.
52:48 - No change in current ratio despite decreasing payables.
1:00:33 - Choosing the right answer for financial ratios in MCQs.
1:03:27 - Understanding key concepts in working capital management.
1:09:54 - Evaluate the effectiveness of debt versus equity funding.
1:13:03 - Assessing financing options: debt versus equity for company expansion.
1:18:59 - Calculating Share Price using P/E Ratio and Earnings Per Share.
1:22:50 - Calculation of current P/E ratio and revised EPS under debt financing.
1:29:39 - Revised EPS and share price calculations indicate increased shareholder wealth.
1:33:07 - Understanding Capital Gains and Equity Financing Techniques
1:40:44 - Calculation of revised EPS and share price for Spine Co.
1:44:11 - Debt financing increases shareholder wealth more than equity financing.
1:52:29 - Understanding systematic and unsystematic risk in investment portfolios.
1:56:55 - Portfolio theory highlights total risk and its components for shareholders.
2:05:27 - Understanding minimum rate of return and risk management concepts.
2:09:55 - Leading and legging in payments to manage currency fluctuation risks.
2:16:18 - Understanding currency and interest rate risks through various economic theories.
2:19:52 - Understanding derivatives through coupon discounts and futures contracts.
2:26:58 - Prioritize easy questions to quickly gain marks in ACCA FM exams.
2:30:04 - Efficient exam techniques enhance time management for ACCA questions.
2:37:29 - Weaknesses of the IRR method are discussed, especially its reinvestment assumption.
2:40:39 - Calculating NPV using nominal cost of capital

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Key Insights for [ACCA FM | Day 2 |
**Webinar Overview**
- The webinar focuses on the financial management aspects of ACCA FM, specifically covering past paper questions from the Spine Co September/December 2020 exam.
- The session includes interactive components such as chat engagement, allowing participants to confirm audio and visual clarity.
- Participants are encouraged to join a WhatsApp group for ongoing support, access to materials, and community interaction.
**Working Capital Management**
- Working capital is defined as current assets minus current liabilities, crucial for daily operations and liquidity management.
- A balance between profitability and liquidity is emphasized; businesses must avoid prioritizing one at the expense of the other.
- Effective management of working capital includes assessing inventory, receivables, and payables, with a focus on maintaining adequate liquidity without overextending credit.
**Risks in Working Capital**
- Overtrading occurs when businesses expand sales without sufficient working capital, leading to liquidity issues.
- Overcapitalization refers to excessive investment in current assets, causing cash flow problems.
- Strategies for managing working capital risks involve monitoring cash cycles and ensuring a balance between short-term and long-term funding sources.
**Cash Management Techniques**
- Effective cash management strategies include maintaining optimal cash balances and using forecasting tools like cash budgets to predict future cash positions.
- The BOML model helps balance ordering costs and holding costs in cash management.
- Techniques such as leading and lagging payments can help mitigate transaction risks associated with currency fluctuations.
**Investment and Financing Decisions**
- The webinar discusses the evaluation of financing options, comparing debt and equity financing, and the implications for shareholder wealth.
- Factors such as cost of capital and expected returns are critical in determining the best financing method for expansion.
- Understanding the impact of different financing methods on earnings per share (EPS) and share price is essential for making informed business decisions.
**Final Tips for Exam Preparation**
- Focus on solving easy questions first to secure quick marks, followed by more challenging ones.
- Utilize effective time management strategies to complete all questions within the allocated time.
- Review key concepts regularly and engage with practice questions to reinforce understanding and application of financial management principles.

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Thank you!