Financial Management (FM) March/June 2026 Examiner's Report: Key Lessons for ACCA Students

Many ACCA FM students struggle to score well despite knowing the formulas and concepts. Calculation errors, incorrect assumptions, and generic discussion answers can lead to lost marks, especially in scenario-based questions.

The Financial Management (FM) March/June 2026 Examiner’s Report highlights these common mistakes and explains what examiners expect from candidates. It covers performance across Sections A, B, and C, along with practical lessons on calculations, scenario-based answers, and clear conclusions. 

Reviewing this feedback can help ACCA students identify weak areas, avoid repeated mistakes, and prepare more effectively for their next FM exam attempt.

What Is the Financial Management (FM) March/June 2026 Examiner's Report

The Financial Management (FM) March/June 2026 Examiner's Report is an official document released by ACCA. It is written by the examining team after reviewing student scripts from the exam session. This FM Examiner Report explains what students did right and where they lost easy marks.

Students preparing for the ACCA F9 Examiner's Report topics find this feedback useful because it comes directly from the examiners who set and mark the paper. It also links to the ACCA Practice Platform, where the full sample exam and answers are published.

Key Highlights From the FM Examiner's Report June 2026

The FM exam is a computer-based exam (CBE), and candidates do not all receive the same set of questions. This report focuses on select questions that caused difficulty.

• Section A: Objective test questions covering core knowledge areas

• Section B: Case-based objective test questions, testing topics in more depth

• Section C: Two constructed response questions requiring calculations and discussion

• The report reminds students to be confident with spreadsheet tools like the NPV function

• Discussion answers must always link back to the case, not just repeat textbook theory

The ACCA FM examiners' report notes that strong technical knowledge alone is not enough; students must also apply that knowledge to the scenario given.

Financial Management (FM) March/June 2026 Examiner's Report Download PDF

Section A: Four Questions That Caused Difficulty

Example One — Cost of Preference Share Capital
Blue Co has 6% preference shares with a nominal value of $0.50, quoted at $0.59 cum div, with tax at 25%. The correct answer was 5.4%, calculated using the ex-dividend price ($0.56) rather than the cum-div price. Many candidates missed the ex-dividend adjustment, and some incorrectly deducted tax after calculating the cost.

Example Two — Payback Method (Two False Statements)
Candidates had to identify which two statements about payback were false. The correct answers were A and C — payback does not consider overall project profitability, and it does not measure financial benefit (that's what NPV does). Many candidates struggled to distinguish payback's real limitations from its actual features.

Example Three — Implicit Annual Interest Rate
A sale and repurchase agreement involved selling $20m of treasury bills for $19.23m, repurchased in 60 days for $19.34m. The correct annualised rate was 3.48%, using the formula [1+((19.34-19.23)/19.23)]^(360/60). The most common error was using a simplified pro-rata method (giving 3.43%) instead of the technically correct compounding approach.

Example Four — Functions of the Money Market
Candidates identified which two options were NOT functions of the money market. The correct answers were B (risk transformation) and C (aggregation of funds) — both are roles of financial intermediaries, not the money market itself.

Section B: The Orla Co Case

This case tested business valuation methods using Orla Co, a listed company with a 12% cost of equity and 4% dividend growth.

• Question One (P/E Method): Correct answer was $756m ($84m profit × 9 P/E). Common errors included using retained earnings instead of profit, or incorrectly applying the growth rate.

• Question Two (Dividend Valuation Model): Correct answer was $637m, using d1 = $49m × 1.04 divided by (0.12 – 0.04). Some candidates forgot to grow the dividend to d1.

• Question Three (Market Value of Loan Notes): Correct answer was $120.5m, discounting interest and redemption at the 7% cost of debt (not the 6% coupon rate) and accounting for the 5% redemption premium.

• Question Four (Capital Market Efficiency): Correct answers were B and D — technical analysis fails in weak-form efficiency, and semi-strong efficient prices react to positive NPV announcements.

• Question Five (Noise Traders): Correct answers were A and C — noise traders follow trends and overreact to news, rather than making rational, well-timed decisions.

Section C: Constructed Response Questions

AgeAid Co — Lease or Buy Decision (20 marks)

Requirement (a) — 10 marks: Candidates evaluated whether AgeAid, a charity, should buy or lease vehicles. The recommended approach was building separate schedules for buying and leasing, then comparing present values.

For buying, this meant including the $300,000 initial cost, maintenance costs rising 20%, 30%, and 40% annually, other running costs rising 5% annually, and the residual value calculated via 20% reducing-balance depreciation — while excluding depreciation itself, since it isn't a cash flow. The net present cost of buying came to $338,552 at a 9% discount rate.

For leasing, four advance payments of $80,000 plus other running costs at 75% of the buying option's costs gave a present cost of $334,593. The conclusion: leasing is the better option on financial grounds, being cheaper by roughly $3,959–$4,016 depending on rounding.

Common errors included calculating only three years of depreciation, including residual value in the wrong year, and unnecessarily computing Equivalent Annual Cost — which isn't needed when both options cover the same time period.

Requirement (b) — 4 marks: Candidates needed two non-financial reasons for leasing over buying, each developed in depth for 2 marks rather than just stated for 1 mark. Suggested reasons included smoother cash flow (regular $80,000 payments vs. a $300,000 lump sum), and reduced maintenance/replacement burden. Points about tax relief were not creditworthy, since AgeAid is a tax-exempt charity.

Requirement (c) — 6 marks: Candidates explained the 3Es framework — Economy, Efficiency, and Effectiveness — and applied it to AgeAid specifically. Each E needed both a definition and an example tied to the charity (e.g., economy = sourcing low-cost ingredients for meals; efficiency = meals delivered per vehicle; effectiveness = number of activities offered). Generic definitions without AgeAid-specific illustration could not earn full marks.

Time Co — Business Finance (18 marks)

Requirement (a)(i) — 5 marks: Operational gearing (Contribution ÷ Operating Profit) was calculated for 20X1–20X3, showing an increasing trend that signals higher fixed costs and greater sensitivity to sales changes — raising perceived risk for external lenders.

Requirement (a)(ii) — 7 marks: Candidates compared internal funding versus bank loan funding using debt/equity ratio, interest cover, and effective interest rates. The bank loan option raised financial gearing, though forecast interest cover remained strong at 14.4 times.

Requirement (b)(i) and (b)(ii) — 4 marks: These asked why the finance director might limit dividends (retaining cash for expansion) and why shareholders might object (reliance on dividend income). Answers needed to link directly to Time Co's situation rather than offer generic dividend theory.

Requirement (c) — 4 marks: Candidates discussed SME financing difficulties — limited trading history, inadequate security, limited shareholder funding, and external investor demands for control or an exit route.

How Students Can Prepare Using the FM Examiner's Report 2026

Reading the Financial Management (FM) March/June 2026 Examiner's report is only useful when students apply its lessons. Here are simple steps to follow:

• Practice past questions from the ACCA Practice Platform regularly

• Learn exact formulas instead of shortcuts that may be inaccurate

• Always link discussion answers to the case given in the question

• Practice using spreadsheet functions like NPV for faster, accurate answers

• Write a clear final conclusion after every calculation-based question

The Financial Management (FM) March/June 2026 Examiner's report is a helpful guide for every ACCA FM student. It highlights real exam mistakes, correct methods, and useful tips straight from the examining team. Reviewing this report carefully, along with regular question practice, can help students prepare smarter and pass the FM exam with more confidence.