CA Intermediate Financial Management and Strategic Management Classes

CA Intermediate Paper 6 — Financial Management and Strategic Management

Paper 6 is a 100-mark paper with two distinct halves: Financial Management (~60 marks) — the numerical, analytical section covering capital decisions — and Strategic Management (~40 marks) — the qualitative, frameworks-based section covering business strategy. Both sections appear in the same paper, requiring candidates to shift between quantitative and qualitative thinking within one 3-hour exam.

Financial Management — The Numbers Half

• Scope and Objectives of Financial Management — Profit maximisation vs wealth maximisation, the finance function
• Time Value of Money — Present value, future value, annuity — the foundation for all capital budgeting
• Capital Budgeting — NPV, IRR, MIRR, Profitability Index, Payback Period, Discounted Payback. NPV vs IRR conflict resolution. Capital rationing problems. Typically 20–25 marks per exam.
• Cost of Capital — Cost of equity (CAPM and dividend growth model), cost of debt, WACC computation, Weighted Average vs Marginal Cost of Capital
• Capital Structure and Leverage — Operating leverage, financial leverage, combined leverage; EBIT-EPS analysis; optimal capital structure theories
• Sources of Finance — Equity, preference shares, debentures, term loans, lease financing, venture capital
• Working Capital Management — Estimation of working capital requirement, cash management (Baumol model), receivables management, inventory management (EOQ, JIT)
• Dividend Decisions — Gordon's model, MM approach, Walter's model; factors affecting dividend policy

Strategic Management — The Frameworks Half

• Business Policy and Strategic Management — Mission, vision, objectives, goals; strategic intent
• Strategic Analysis — PESTEL analysis, Porter's Five Forces model, value chain analysis, SWOT analysis
• Strategic Formulation — Grand strategies (stability, expansion, retrenchment, combination); Ansoff matrix; BCG matrix
• Strategy Implementation and Control — McKinsey 7S framework, Balanced Scorecard
• Digitalisation and Strategic Management — Digital transformation, e-business strategy

How to Approach This Paper Strategically

Most candidates are stronger in either FM or SM — not both. In the exam, do not fall into the trap of spending 2 hours on FM numericals and rushing through SM theory. SM theory questions (10–12 marks each) reward well-structured answers with clear framework application — "using Porter's Five Forces, analyse the competitive environment" is worth more if you answer with structure than if you write a long but unorganised essay. Allocate time proportionally: ~108 minutes for FM (60 marks), ~72 minutes for SM (40 marks).