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ACCA Financial Management (FM) 2025 past questions and answers

This 2025 ACCA Financial Management (FM) set has 19 practice questions. Try these 5 free sample questions, tap a question to reveal the answer and explanation. Then practise the whole 2025 set with instant marking.

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Sample ACCA Financial Management (FM) 2025 questions

1. Aster Ltd's board is reviewing how its finance team should assess a proposed strategy. The company is listed, and shareholders expect sustainable returns. Which financial management objective is most appropriate?
  1. Maximise this year's reported profit regardless of risk
  2. Maximise shareholder wealth, taking account of timing and risk
  3. Maximise sales revenue even if projects destroy value
  4. Minimise all borrowing and investment

Answer: B. Maximise shareholder wealth, taking account of timing and risk

Shareholder wealth reflects expected returns, their timing and risk, and is the usual financial management objective for a listed company. Maximising one year's profit ignores both risk and the effect on future value.

2. The central bank raises its policy interest rate to restrain inflation. Vale Ltd is considering a project whose cash flows are unchanged by the announcement. Which effect is most likely, all else equal?
  1. The company's corporation tax rate must fall
  2. The project's nominal cash flows automatically increase
  3. Borrowing costs and required returns may rise, reducing the project's present value
  4. The company's exposure to foreign exchange risk disappears

Answer: C. Borrowing costs and required returns may rise, reducing the project's present value

Higher market rates can increase borrowing costs and investors' required returns, so unchanged future cash flows are discounted more heavily. The policy rate does not itself set tax rates or remove currency exposure.

3. Mira Ltd uses inventory costing $14.6 million per year and holds average inventory of $2.0 million. Assume a 365-day year and use inventory divided by annual usage to calculate inventory days. What are its inventory days, to the nearest whole day?
  1. 50 days
  2. 40 days
  3. 60 days
  4. 73 days

Answer: A. 50 days

Inventory days = $2.0m / $14.6m × 365 = 50 days. Using sales rather than inventory usage would not follow the stated basis.

4. North Ltd estimates that a project has a positive net present value after discounting its expected cash flows at the company's appropriate, risk-adjusted cost of capital. The forecast is considered reliable. What is the financially appropriate recommendation?
  1. Reject it because a positive NPV means the discount rate was too low
  2. Accept it because it is expected to add value
  3. Accept it only if its payback is less than one year
  4. Reject it because NPV ignores the time value of money

Answer: B. Accept it because it is expected to add value

A positive NPV at an appropriate risk-adjusted rate indicates that the project is expected to earn more than the required return and add value. NPV explicitly incorporates the time value of money.

5. Elm Ltd calculates a project's internal rate of return as 12%. Its risk-adjusted cost of capital is 10%, and the project has conventional cash flows (one initial outflow followed by inflows). Which conclusion follows?
  1. The project's NPV must be zero at 10%
  2. The project should be rejected because IRR exceeds the cost of capital
  3. The project has a positive NPV at 10% and should be accepted, subject to other constraints
  4. The project's payback period is exactly 12 years

Answer: C. The project has a positive NPV at 10% and should be accepted, subject to other constraints

For conventional cash flows, NPV is positive when the discount rate is below the IRR. Here 10% is below 12%, so the project has positive NPV at the required return.

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