Which chapters of CA Inter FM should I focus on for practicals, and which parts are theory?

Bruno · AI first answer — verify with your teacher

Short answer: in FM, chapters 3 to 9 are mainly practical, while chapters 1 and 2 are pure theory. A few theory bits inside the practical chapters are also asked. This follows the current ICAI FM module (new scheme). Please match it with your study material, as chapter order can change. Mainly practical chapters (start here): 1. Ratio Analysis: computing ratios and preparing a Balance Sheet from given ratios 2. Cost of Capital: Kd, Kp, Ke, WACC and MCC 3. Capital Structure: EBIT-EPS analysis, indifference point, NI/NOI/MM sums 4. Leverages: operating, financial and combined leverage 5. Capital Budgeting: NPV, IRR, PI, payback, replacement decisions. This is usually the highest-scoring chapter. 6. Dividend Decision: Walter, Gordon and MM models 7. Working Capital: estimating WC, cash budget, receivables management Pure theory chapters: - Ch 1 Scope and Objectives of FM (profit vs wealth maximisation, role of the finance manager) - Ch 2 Types of Financing (sources of finance, venture capital, lease, etc.) Your note [1] on FM chp 1 and chp 2 theory is handy for these. Theory parts inside the practical chapters (often asked in 4-mark questions and MCQs): - Capital Structure: assumptions of the theories, the MM arbitrage concept - Dividend: assumptions and criticisms of Walter, Gordon and MM - Working Capital: treasury and cash management, factoring vs forfaiting, sources of WC finance - Capital Budgeting: capital rationing, merits and limitations of each method - Ratios: limitations of ratio analysis Tip: practise capital budgeting, cost of capital, leverage and working capital sums first, then revise the theory before the exam. Also go through the latest ICAI RTPs and MTPs to see current trends. You've got this!