CAFM — CS Executive's Numbers Paper
Corporate Accounting & Financial Management (CAFM) is unique among CS Executive subjects — it is numerical-intensive in a course that is otherwise law-dominant. With 19 chapters and 485 pages, many CS students who are law-oriented struggle with it. But it is also one of the most scoring papers when prepared correctly.
Part A: Corporate Accounting
- Preparation of financial statements — Balance Sheet, P&L, Cash Flow Statement (Indirect Method)
- Company accounts — issue of shares at premium/discount, bonus shares, rights issue, buy-back
- Redemption of preference shares and debentures
- Amalgamation and absorption — purchase consideration, pooling method
- Consolidated Balance Sheet — holding and subsidiary companies
Part B: Financial Management
- Capital Budgeting — NPV, IRR, Payback Period, PI — at least one question every exam
- Working Capital Management — current ratio, quick ratio, cash conversion cycle, debtors/creditors management
- Ratio Analysis — liquidity, profitability, leverage, activity ratios — interpretation is as important as calculation
- Capital Structure — EBIT-EPS analysis, financial leverage, operating leverage, combined leverage
- Cost of Capital — WACC calculation, Ke (Gordon's model, CAPM), Kd (yield to maturity)
Key Formulas
- NPV = Σ (Cash Inflow / (1+r)^n) − Initial Investment
- IRR = Rate where NPV = 0
- WACC = (We × Ke) + (Wd × Kd × (1−t)) + (Wp × Kp)
- Operating Leverage = Contribution / EBIT
- Financial Leverage = EBIT / (EBIT − Interest)
💡 Track CAFM chapter by chapter on e-mentor. Given its 19-chapter span, students often cover Part A (accounting) but skip Part B's FM chapters. The planner ensures equal attention to both halves — because ICSI papers consistently draw 40–45% of marks from financial management topics.
Exam Tips
- Always show your formula before the calculation
- In ratio analysis, always interpret the ratio — not just compute it
- For consolidation questions, prepare a step-by-step workings table first
- Past papers from the last 5 years have very similar NPV and WACC question formats — solve them all