Are you studying for your ACCA Advanced Financial Management (AFM) exam? This overview is designed to provide you with the key information for success in this optional ACCA Strategic Professional level unit.

What are the exam topics?

AFM builds on the knowledge gained in earlier financial management studies and focuses on the role of senior financial executives in making and implementing financial decisions. It involves a high level of complexity and requires you to apply your knowledge in a strategic context.

It’s all about making the ‘big decisions’ within a business – how to grow, how to finance that growth and how to manage the risks that come with it.

The core areas of the syllabus include:

• Senior financial role within a multinational organisation: This isn't just about balance sheets and number crunching. This covers the role and responsibilities of the senior financial executive, the impact of the economic environment on financial management, and corporate governance. You'll explore how economic shifts, technological disruptions (think AI and blockchain), and ESG (Environmental, Social, and Governance) factors are reshaping finance.
• Advanced investment appraisal: This section deals with complex investment decisions, building on the investment appraisal calculations you’ve seen in the Financial Management (FM) exam. It considers issues such uncertainty, different currencies and strategic considerations, using methods such as adjusted present value, and real options.
• Acquisitions and mergers: You'll cover how and why companies combine, the complex valuations and financing involved, and the strategic reasons behind these moves. Think about the recent acquisition by the energy giant ExxonMobil of Pioneer Natural Resources for nearly $60bn. AFM gives you the tools to understand the financial and business logic behind such mega deals.
• Corporate reconstructions and reorganisations: This involves the financial management issues faced by businesses in distress, including restructuring, insolvency, and turnaround strategies.
• Treasury and advanced risk management: In the modern, unpredictable world, managing financial risk is vital. This section focuses how companies can help protect themselves against currency fluctuations, interest rate movements, and other market risks.

What is the exam structure?

The AFM exam assesses your ability to apply advanced financial management techniques and make sound financial decisions. The exam includes a mix of question types.

The question in Section A will ask you to produce a response in a specific format, for example a report to the Board of Directors. This case study question will focus on a wide range of different issues from at least two syllabus sections. It’s important that you take into consideration the whole scenario and ‘big picture’ when tackling this question.

Section B questions will be scenario based and contain a combination of calculation and narrative marks.

All areas of the syllabus are examinable, but there is typically a focus on the investment appraisal and risk management areas - so make sure you revise these in detail.

Timings

The total time in the exam is three hours and 15 minutes. This equates to 1.95 minutes per mark.

Many learners like to allocate around 1.8 minutes a mark, so 90 minutes for section A and 45 minutes for each question in section B. This provides a 15 minute safety net for additional reading time.

What are professional skill marks?

There are 20 marks available in your exam for ‘professional skills’, so what are they?

There are four professional skills that can be tested in your exam:

• Communication: This will ONLY be assessed in section A. Your report should have suitable headings and look professional. It should have an introduction and use appropriate, professional language.
• Analysis and evaluation: Analysis means using the right information, with the right calculations to make appropriate and valid conclusions. It’s important to then evaluate these conclusions and take into consideration the entity as a whole and its situation to come up with the best course of action, and what actions need to be prioritised.
• Scepticism: Do you have a questioning mind? Where has this information come from? Might there be bias in people’s opinions or data? What assumptions have been made, and are they valid? What are the problems with any models used? Is any useful data missing? Asking these sorts of questions and applying professional judgement is what gets these marks.
• Commercial acumen: All AFM questions will be based around an organisation, usually ‘for-profit’ entities, but not always. Do the recommendations made or issues identified fit with the size, ethos and culture of that entity? Have you considered the ‘knock on’ effects of your actions? Will your decisions negatively affect other areas of the business? Do your conclusions help build the reputation and sustainability of the entity?

All four professional skills will be assessed in section A, and at least two (not including communication) will be assessed in each section B question.

Professional skills marks can really be the difference between passing and failing AFM, make sure you are thinking about these skills and practising them when doing revision questions.

How does the ACCA Advanced Financial Management (AFM) exam subject help towards my studies and career?

The ACCA AFM unit equips you with the advanced financial management skills and knowledge needed for senior finance roles. It develops your ability to:

• Evaluate complex investment decisions.
• Advise on mergers, acquisitions, and corporate restructuring.
• Manage financial risk at an advanced level.
• Make strategic financial decisions in a global context.

These skills are highly valued in roles such as Finance Director or Financial Controller, as well as equipping you for roles within treasury departments or financial consultancy.

As well as the technical skills you will learn, the professional skills such as communication, evaluation and commercial acumen set you up for success in most roles within a business.

What are the key challenges for this subject and how would you address these?

Applying knowledge to complex scenarios

AFM often presents complex, real-world scenarios that require you to integrate and apply knowledge from different areas of the syllabus. Students often find this difficult and struggle to see how various parts of AFM all link together.

How to address: Work through as many case studies and past exam questions as you can to develop your ability to analyse complex situations and apply the appropriate techniques. Don't just memorise formulae! Practise applying your knowledge to realistic case studies, like analysing the financial viability of a major infrastructure project or evaluating the risks and rewards of an acquisition. The more examples and scenarios you see, the better prepared you will be.

Understanding and applying advanced techniques

The syllabus covers advanced financial management techniques that require a thorough understanding and the ability to apply them correctly.

How to address: Ensure you have a strong grasp of the underlying principles and techniques, particularly with NPVs and hedging. Seek clarification from your tutor and use supplementary resources to deepen your understanding and deal with any issues.

Exam technique

AFM exams require you to manage your time effectively and structure your answers clearly and concisely.

How to address: Practise under exam conditions to improve your timing and develop effective exam techniques. Plan your answers before you start writing and ensure you address all parts of the question. Re-read over the requirement when you think you have finished a section to ensure ALL parts of the requirement have been covered.

Also ensure you focus on the professional skills, practise structuring your answers logically and concisely, just as you would when presenting to a Board of Directors.

By following these guidelines and dedicating sufficient effort to your studies, you can boost your chances of success in the AFM exam and help advance your career in financial management.

Additional support and resources

If you’re not already studying ACCA Advanced Taxation with us at Kaplan, give yourself the best chance to pass the exam with our ACCA AFM course. With four study methods, you’ll find a course that’s perfect for you.

When studying with Kaplan, you will have access to the Academic Support team via the ‘contact a tutor’ option on your MyKaplan. They are available seven days a week and can support you with any tricky topics via live chat, email, or by requesting a call back.

And if you have any additional learning needs, get in touch with our inclusion team, who can support you.

Practicing exam-standard questions in timed conditions is essential when preparing for your real exam. Be encouraged to practice questions in the ACCA practice platform when possible.

Alternatively, Kaplan Publishing, an ACCA Content Partner, also offers ACCA Study Texts, Exam Kits, and Pocket Notes - which cover the full syllabus and help you feel exam-confident.