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Tips for Financial Management (IPCC)


Member (Account Deleted) 
posted on 21 March 2011



Just sharing some tips for financial management (FM) subject. If you haven’t complete FM till now or if you are lagging in this subject, then it’s for you.

 

  • First of all do not hurry to complete this subject, take one month time to finish. Cost and fm is really a bouncer subject in PCC... so prepare it very well.

 

  • Buy a padhuka book for COST and FM. 

 

  • There are 9 chapters in FM... Out which chapter no.1 (Basics of FM) and chapter no.9 (Sources of finance) are  theory parts, so it can be done easily, no tension and remaining chapters are practical . 

 

  • Now from the remaining 7 practical chapters one chapter is very small i.e. Time value of money.. You can just go through this and can complete in an hour. The concept of TIME VALUE OF is used in other parts of FM (like Capital budgeting), so its better if you complete this first. (Please through this  chapter once even if you know everything about it)


  • So all you need to work hard is mainly for 6 chapters to finish your syllabus, these are  RATIO ANALYSIS,  FUND FLOW/ CASH FLOW, CAPITAL BUDGETING, COST OF CAPITAL & CAPITAL STRUCTURE, WORKING CAPITAL MANAGEMENT AND LEVERAGE.  Now the subjects look quite achievable... Only 6 chapters and FM is done.

 

  • Before starting any fresh chapter please read (don't learn) the theory part to clear the concept about it and  learn the formulas l. Also see few solved illustrations of any chapter which  you are about to begin. 

 

  • Start from LEVERAGE.. Another small and very easy chapter. It contains just 3 small topics & some formulas. Practice some sums and the chapter is done. You can complete in few hours.

 

  • After that comes the big ones.  I would say start from CAPITAL BUDGETING...it’s very important and every time it is asked in the exam. Give this chapter little time ... never leave this chapter even for a single day and keep on revising  along with other chapters because its a little big and important chapter , solve all the sums of padhuka (or compiler) and repeat it as many times as you can.  Prepare your own Notes; write down all the formulas in a sheet of paper.  Every chapter looks easy in a nutshell; no matter how big it is, especially if the notes are made by you (not by the book).

 

  • Different kinds of sums are asked  from capital budgeting. So when ever you revise this chapter then do atleast 5-6 different type of sums from  this chapter  in a day. For example do one sum from BASICS i.e PAYBACK PERIOD, ARR , NPV , PI & IRR , similarly do one problem sum of multiple projects evaluations or Capital rationing  etc.

 

  • Now there are only 4 chapters are left to be completed.  You can start from any one as per your wish but I would prefer to complete COST OF CAPITAL & CAPITAL STRUCTURE or WOKRING CAPITAL MANAGEMENT first because you might have done the other two chapters in accounts but COST OF CAPITAL or WORKING CAPITAL MANAGEMENT will be new(or different) for you.  COST OF CAPITAL & CAPITAL STRUCTURE  is  a formula based chapter, like you need to compute COST OF EQUITY, WACC etc, so keep track of all the different kinds of sums in this chapter and do it thoroughly. WORKING CAPITAL MANAGEMENT requires little patience, so all you need to do is to keep on practicing it.

 

  • When you are starting new chapter then please do at least 1-2 sums of the earlier completed chapters at the end. Dont ignore revision because revision improves your thinking and writing ability day by day, so if today you can complete a sum in 20-25 minutes, then after random revision you can do the same in 15 minutes (10 min difference is a lot in exam) and in better hand writing & presentation.  Make sure that you never skip "capital budgeting"  revision, its must.

 

  • RATIO is again a complete formula based chapter, you might have done this chapter before in Accounts, so it won’t be new for you. My tip for this chapter is that you learn all the formula of it first and at least revise those formulas once in 2-3 days because this chapter need formula as fuel to work. There may be too many formulas but it’s a very interesting and easy chapter. This chapter is like doing algebra in maths. , so you will enjoy this chapter surely.

 

  • Cash flow and fund flow is a little time consuming chapter, it’s like you are doing accounts, wherein you have to do too many workings. If you have done Cash flow in accounts (IPPC-group 1), then it would  just be a revision for you in FM. Moreover if you know everything about cash flow then fund flow is no big deal to complete. Cash flow /fund flow is a very scoring part in FM. So if they ask from this chapter then you can fetch some good marks.  

 

  • Theory is a part where you lack interest. So for the examination purpose, all you need to do is learn theory part after completing at least 1-2 chapters  because after you have completed few chapters of any practical subject  and after having grip on a chapter then only you can  develop interest for theory.  But this doesn’t means you start a fresh chapter ignoring theories. Ignoring theories (or delaying it for too long) means you may lose some goods marks in FM. 

 

All I can say is that you have to do systematic study to complete anything perfectly. So if some day you complete a chapter and subsequently you do another chapter after a gap 3-4 days (or a week), then your grip over the subject will lose. Specially if the subject is a practical.

 

Last thing I would like to say is that you can still complete your syllabus (whether group 1 or both groups) even if there are less than 1.5 months left for your exam. You just need a to work out properly.

 

ALL THE BEST.

 


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