|So I Finally Found Some Calculations|
This week, I took the AFP Learning System online test for chapters 1 to 3. I didn’t review for it; I just attempted it after reading each chapter once. I managed 69% – so close! The questions are much more specific than I’d anticipated, and I’m obviously going to have to review a lot more. I’m studying every morning, four nights a week, and at least a full day on the weekends, so I feel like the time I’m putting in will pay off at the end. Right now, a lot of that time is going toward my initial reading of each chapter.
To increase my review, I’ve started carrying my flashcards with me, so I have them when my wife and I go out on weekends. She’s offered to help me study when she has time, although she studies full time and works part time. She has a communications background and doesn’t know anything about finance, but it’s very useful having someone else go through the flashcards with me. It forces me to think about my responses. We sat in a park overlooking Sydney Harbour this weekend and went through chapter 4. She can be brutally tough – she separates out the questions that I can’t answer and will keep re-asking them until I finally get them right. It makes for slow progress, but it’s useful. And she’s learning a few things too.
Chapter 5: Financial Planning and Analysis
This chapter covers the time value of money, ratio analysis including liquidity, efficiency and performance rations, and performance measurement, including ROI, free cash flow and EVA. It has a lot of the calculation work I’ve been waiting for: so far they are basic, university level finance calculations. I haven’t used many of these formulas for a while, so I appreciate the review. I’m planning to make formula sheets to memorize the details of the formulas. I guess on the test I’ll be doing these on a computer calculator – I’m not looking forward to that! [editor's note: It's true. The only calculator candidates have access to at the testing site is the one on the testing computer. It's very similar to the one included in the Accessories menu of Windows-based computers. You will have the option of toggling between a standard, four function calculator and a scientific calculator. You will NOT have access to the statistics and programmer calculators that are included with later versions of Windows.]
Chapter 6: Working Capital Management
The material in this chapter moves from formulas back to memorization. It covers the fundamentals of payable, receivables and inventory and the cash conversion cycle. My experience working for a manufacturer makes this chapter easy to remember and understand, although I think I would have grasped the concepts well enough without this experience.
When I’d finished chapter 6, I completed the module 2 review test: I received 79%. However, I looked up all the required formula calculations during the test, because I haven’t memorized them all. I definitely need more practice with these to increase my speed and not have to refer to the textbook so often. Another issue I experienced was difficulty with the rounding of intermediate calculations. The tests are very specific as to the rounding, but their answers round to a lesser number. Doing this on a computer calculator will definitely slow my test speed, so I have to know these formulas cold.