Beyond the numbers in AFM

May 2024

Steve Chen explains how to pick up the easy marks in the discussion part of the AFM exam.

Throughout my years of experience teaching the ACCA Advanced Financial Management exam, being an official marker for the largest accountancy body in the world, and being the official exam marker at ICAS, I’d like to share some tips regarding how to pass this paper.

There are two vital things to bear in mind:

  1. Understand your role – to present analysis to the board rather than simply jumping to the conclusion.
  2. Work hard on the discussion requirements.

Calculative and discussion requirements

Calculation in the AFM exam seems to be difficult for many students; however, the discussion requirements usually contain many easy marks. Examples:

  • Comment on or discuss additional matters to consider when making investment decisions.
  • Comment on or discuss the factors to consider when considering potential financial options.

    A weak answer tends to focus on:
  • Appropriateness of the current company’s strategy, such as commenting on whether it should leave this industry.
  • Whether the company should proceed with the decision, such as by advising the board not to proceed with the investment.
  • Appropriateness of the current financial decision, such as simply advising the board not to go ahead with the debt finance option.


The student answers mentioned previously completely misinterpret the AFM exam’s requirements. These types of answers usually do not earn any marks because the questions are designed to assess the students’ ability to demonstrate critical thinking, not simply to arrive at a conclusion.

Therefore, I would highly recommend my students follow the below approach to answer the discussion requirements in the AFM exam. Example of requirement:

Discuss the factors to consider when making investment decisions.

Your answer could include:

  • Calculation: Make sure you comment on the calculation. It is highly likely that Analysis and Evaluation professional marks will be awarded.
  • Cash flows: Comments regarding the potential investment options should be from a cash flow’s perspective; indeed, this is the key element of the AFM syllabus. Things to mention could include sensitivity analysis, option value analysis, and simulation analysis.
  • Pros and cons: If you are given more technical areas, such as ways to finance the business, make sure you also comment on the pros and cons of each method.

Writing style

Unlike in other SP-level papers, the writing style of the AFM exam questions should adopt ‘the simple sentence’ approach. There is no need to further expand the answer if the point is touched on in the answer. I would teach my students to use the ‘Point + So what’ style in the discussion question.

It’s important to note that the AFM exam does not allow for partial marks; that is, there are no half marks in the discussion requirements. Each discussive point made can earn one full mark or none at all, depending on the marker’s assessment of the explanation’s clarity.

  • Steve Chen, FCCA, ACA, is the founder at GlobalAPC and an exam marker for two professional accountancy bodies