Quick & Easy Preparation Tips & Tricks on CA Intermediate - CA Inter Financial Management
Do what you will but do not take it easy with CA-Intermediate exams. They will sneak up on you before you know it. The syllabus for CA-Intermediate Paper 8- Financial Management & Economics for Finance is not very vast. The subject is newly introduced in Group 2 of CA Intermediate. It is not too lengthy and the topics are easily understandable, so you can hope to score well in in this paper.
To make sure you clear exam smoothly in the upcoming attempt, start studying now. To score good marks in CA Inter Financial Management & Economics for Finance, you must develop conceptual understanding and as well as master diagrams and graphs. Make sure that you do not leave out any topic. Start the topics depending on their length and as per your convenience.
Read on to find out why, you else you can do to score more in CA-Inter Paper-8.
CA-Intermediate – Financial Management & Economics for Finance
Total marks allotted: [100 marks]
Financial Management: [60 Marks]
Economics for Finance: [40 Marks]
Passing Marks: [40 Marks]
Section A: Financial Management:
- To develop ability to analyze and interpret various tools of financial analysis and planning;
- To gain Knowledge of management and financing working capital;
- To understand concepts relating to financing and investment decisions;
- To be able to solve simple problems.
Important Topics to be covered:
- Financial Management and Financial Analysis (Introduction and Analysis through Ratios) Weightage 10%-15%- Role, Scope, objectives of financial management; Functions of Finance executive in an organization; financial distress and insolvency, Learn theory of limitation of ratio analysis, Users and sources for Data Financial analysis;
- Financing Decisions (Sources of Finance, Leasing, Cost of Capital, Capital Structure, Leverages) Weightage 40%-45%
- Source of Finance: Concept of Different Sources of fund; Methods of raising Funds; Internal Funds as source of finance & International Source of finance;
- Lease Financing: Understand characteristics of operating lease and financial lease for decision making and its problems;
- Cost of Capital: Meaning of Cost of capital for raising fund from different sources of finance; measuring cost of individual components of capital; Calculation of weighted and Marginal Cost of Capital, Effective Interest rate;
- Capital Structure- Capital structure theories-NI Approach, Traditional Approach, NOI Approach, MM, Approach, Trade off theory, pecking order Theory; Financial break even and indifference analysis;
- Leverages – Business and Financial leverages, Types of leverages, Positive and Negative leverages, Financial leverages as `Trading on Equity’, Leverages as `Double Edge Sword’
- Capital Investment and Dividend Decisions (Capital Investment, Adjustment of risk and Uncertainty in capital budgeting decision, dividend decisions.) Weightage 30%-35%-
- Methods of investment appraisals; Probability Analysis,
- Certainly equivalent method, risk adjusted discount rate, Monte Carlo simulation, Decision tree analysis, Scenario Analysis, Sensitivity Analysis, Determinants of Dividend, Relevancy and irrelevancy of dividend policy.
- Management of Working Capital ( Liquidity and profitability) Weightage 10%-15%
- Need of working Capital, Factors Determining the working capital, Methods of estimating working capital, Management of working capital assets.
Section B- Economics for finance:
Objective: To develop understanding of the concepts and theories of Economics in the context of finance and ability to address application oriented issues.
Important Topics to be covered:
- Determination of National Income Weightage 20%-30%
- Usefulness and significance of National Income Estimate.
- Outline measurements of National income in India
- The System of Regional Accounts in India
- Challenges involved in National income computation.
- Define Keynes Concept of equilibrium aggregate income
- Describe and Explain component of income and expenditure in two, three, four sector economy models.
- Functioning of multiplier
- Public Finance Weightage 20%-30%
- Rationale of government intervention in markets
- Three branch taxonomy of Government in market economy
- Interventionist measures adopted by the government.
- Fiscal policy, Instruments of Fiscal policy
- Concept & Different Sources for failure of market.
- Government interventions for correcting market failure
- Functioning and outcomes of price interventions.
- The Money Market Weightage 20%-30%
- Concept, Theory and Factors affecting the Money Demand and Supply.
- Components, operating policy, organizational structure of Monetary Policy.
- International Trade Weightage 20%-30%
- International trade and how it differs from internal trade.
- Merits and demerits of liberal trade.
- Ricardian theory for comparative advantage.
- The modern theory of trade.
- Trade policy and its types of trade policy measures.
- Trigger price mechanism for protection of domestic industries.
- Major concerns in respect of functioning of WTO
- Changes in exchange rates and their impact on the real economy.
- Potential Costs and benefits of foreign direct investment.
Preparation tips for CA Intermediate Paper - 8 Financial Management & Economics for Finance
- Start Early – Start early and finish as much of your syllabus as possible even before majority of the students start preparing. This will give you a competitive edge above your peers. Not only that, it will give you enough time to revise the provisions later.
- Don’t go for selective study – There are no such thing as ‘unimportant chapters’. Only some chapters can be said to hold more importance over others. For that, refer to the chapter-wise weightage given above and study accordingly.
- Revise the more important topics at least 3 times –It is crucial to do repeated rounds of revision for this subject as there is too much to remember, and it is easy to get confused. While revising, refer to your notes and practice manuals. Don’t start re-reading from the study material all over again.
- Appear for at least one mock test – Mock tests are the best way to check preparedness for the exam. In any case, it is better to make mistakes before the real exam and rectify them while there’s still time.
For this subject, it is important to understand concepts of theories of model of finance as well as economics. Try to remember formulas and steps of different ratio, models and methods of finance. And make sure you keep practicing problems from Study material, RTP, Mock test papers given by ICAI.
Follow the preparation tips and tricks in this blog post, and keep coming back to revisit the pointers from time to time. We are sure you will score well in CA-Inter Paper-8 Financial Management and Economics for Finance.