10 Magic Tips for Passing CIMA F3

cima f3 tips

 

Are you looking for some last minute tips to help you pass F3?

Do you want to know what the top tutors on this paper say?

When it comes to answering CIMA F3 exam questions, it can be a real puzzle to understand what the examiner is asking for, leaving your brain ready to pop.

However, many before you have passed this exam, including myself, and I know you can do it too.

With this in mind, below you’ll discover my best tactics for overcoming CIMA F3, including the latest advice from some top tutors.

1. Key topics to cover

Whilst covering the whole syllabus in your preparation is important for passing F3, the key syllabus areas to go through before your exam are business valuations and overseas investment appraisal. Revision on these areas will also help you cover cost of capital and project management issues.

Key topics tested in this paper often include

  • Acquisitions
  • Cost of capital
  • Dividend policy
  • Overseas investment appraisal
  • Forecasting

You fill in any knowledge gaps you have regarding the syllabus or the pre seen here

For the Section A case study question, here are some ideas on what could come up in November’s exam according to BPP tutor Doug Haste:

Y could be seeking a listing (it will need to value itself for this) or could be considering a major acquisition (it has a large cash surplus as at 31 Dec 2013) which could be an overseas acquisition or indeed an overseas investment. Y has loans to renew in 1 year, so should it finance this with further debt or a rights issue? Does its disappointing profit forecast mean that you will have to produce a revised forecast for 2014 or 2015, and does it put pressure on Y to review its policy of paying regular and consistent dividends?

Based on this pre-seen I think that dividend policy (mentioned in the pre seen), forecasting (again, mentioned), acquisitions / valuations (often tested in Q1), overseas investment appraisal (again often tested) and sources of finance (Y has loans to repay in 1 year) are all contenders

2 Practice your structure and presentation

It’s worth spending time practicing your report format. This doesn’t have to be complicated but it should help guide the reader through your answers.

Typical elements to include in your report structure are:

  • Who it’s to and from
  • The (exam) date.
  • A short introduction outlining the contents of the report ( a couple of sentences)
  • Use regular subheadings (answering the various requirements e.g. part a = section A of report)
  • Finish off with a conclusion (again normally short but this depends on the wording of the question).
  • Your calculations should be presented as an Appendix; there is nothing wrong with presenting the Appendix before the report – this is easier under exam conditions.

With regards to the layout of your calculations, try to use a standard format for the required technique.

For example, put a DCF and cash flow calculations in a clear tabular form so that they’re easy to read and mark (it’s often best to show the years along the top and list the cash flows down the left-hand side)

 3. Try to think like a CFO in your Exam

By this I mean you need to think about the impact of issues on the company as a whole – have a holistic view

For instance, shareholders, and hence directors, tend to be concerned about growth trends and this impacts upon the decisions that are made about financial strategy.

As an example of the ‘big-picture thinking’ required in the exam, think about the significance of an investment to the top management team.

It’s easy to get lost in the detail of a DCF calculation, but the whole investment may not be significantly risky, given the amount of cash available. So it wouldn’t be appropriate to focus solely on financing issues. The key strategic significance of an issue such as this is usually the potential for using a project as a springboard for growth.

4. Make use of the 20 minutes reading time

The main part of the reading time should focus on the compulsory question. However, because the 50 mark question can be intimidating it can be helpful to spend the first 5 -7 minutes choosing which section B questions you will attempt. This is an important decision and manageable in this time frame.

You can then move on to focus on Q1 for the remainder of the reading time. During the remainder of the reading time you should immerse yourself in the scenario and make sure that you have clearly underlined all the key requirement words and planned how long you will spend on each area

5. Master your time management

If time-management is not your strong point, it is much safer to answer Section A first.

It is generally easier to pick up marks in Section B under time pressure than in Section A but as Section A is inevitably longer and more involved than a question in Section B, it s better to tackle Section A first where you can fully utilise the 20 minutes reading time and deal with this information whilst it is still fresh in your mind.

It’s also easy to get carried away in Section B, producing two near-perfect answers, but end up failing the exam because you’ve left with insufficient time to get to grips with Section A.

However, IF you really are worried about Q1 it can make sense to do your ‘easiest’ optional question first to build your confidence, before attempting Q1.

But normally the best strategy is:

1st – Tackle Q1

2nd – Do the easiest optional question

3rd– Lastly, do the final optional question.

 6. Map your answers to the marks available

Usually there are lots of issues to discuss but you need to be aware of how many marks are available which should in turn determine how many points you raise and in how much depth.

Try to cover only the most significant issues and stick to your timings.

In fact a key difference between an average answer and a good one is the ability to determine what’s significant and what isn’t.

NB When you go through the model answers in your exam practice, make sure you also review in detail the marking scheme as this will help reveal where the easy marks are and how many marks are likely to be available for each point you make.

 7. Pick up the easy marks

Some of the often overlooked, but easier marks to be obtained in this paper are:

  • Copying the relevant figures from the unseen
  • Explaining briefly (where necessary) what you are doing in your workings so that the marker can follow them.
  • Referencing your calculations in your discussion
  • Providing a standard report format and layout of calculations. There are usually up to three marks for this.

8. Sense check your calculations

Take a minute to step back and sense check that the calculation you have produced seems credible and addresses what the examiner is asking for in the requirements

Sometimes the calculations can go badly wrong and you end up with a final answer that is obviously invalid (e.g. a cost of capital of 125%). In that case, it is perfectly acceptable to make an assumption and give a rough estimate of what you think the correct answer might have been and then base your discussion on that assumption.

A key mindset to have at this level is to force yourself to move on when you get stuck

9. Assume your calculation is right if it seems reasonable

The F3 examiner states “performance in the calculation part of a question should have no impact on performance in the discussion parts.”

Therefore, when you come to discuss your numbers, full credit is available for narrative, regardless of whether or not the calculation part is correct.

Even if you suspect that your calculations are wrong, you can be confident that you still have the chance to obtain full marks in the narrative section. The narrative should be based on the results you have produced in your calculations and will be marked accordingly

As an example to emphasise this point – even if the examiner’s answers include a recommendation that a particular project should be rejected but your calculations say the opposite, you would still have had the potential to gain full marks on the discussion part of your answer if you base your narrative on the project being accepted.

10. Prepare wisely for the final few weeks

Doug from BPP says:

The first step is to consider your technical knowledge – before doing a question on any syllabus area it is worth refreshing your knowledge of the syllabus area, remember that F3 is a fairly technical exam (more so than the other Strategic level exams) so technical knowledge is key.

Then I would recommend doing TIMED question practice on a full range of syllabus areas. Time management is very important for F3 and as the exam is heavily time pressured it makes sense to practice working under time pressure.

Finally it is worth re-reading the pre-seen case study to ensure that you have a good understanding of the financial issues affecting Y.

Nas Khan from Astranti says:

In terms of NPV, practise the more difficult aspects i.e. inflation, capital allowances and working capital. For overseas investment appraisal (may pop up in section A) know how to use interest rate parity (IRP) and purchasing power parity (PPP) to calculate forward exchange rates

Create and share your own list

I highly recommend you jot down all the top tips that resonate with you for this paper as well as those that apply to any CIMA exam.

Highlight the words and phrases that grab your attention and refer to them regularly in the lead up to your exam so that they become ingrained in your head.

Do you have any tips of your own that would inspire other students? Which of the ones from the list here sparked your interest? I’d love to hear your thoughts.

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