ACCA APM — Advanced Performance Management

APM gives you
no formula sheet

Two maths tables. That's it. Every formula you need comes out of your own head.

FM, AFM and PM candidates all get a formulae sheet on screen. You don't. ACCA states it plainly: “A formulae sheet will NOT be provided in the exam.” So here is everything you have to know unaided — with a calculator on each one.

Show me what I have to memorise

What you get, and what you don't

The whole of APM's quantitative content, sorted into the two things ACCA hands you and everything it doesn't.

What you DO get — the 2 tables ROI & RI EVA Expected values & risk Market size & share Learning curve Everything else
The good news, in full

You get two tables

Present value factors and annuity factors. Nothing else is provided, and nothing else is coming.

Provided

Discount and annuity factors

The two tables ACCA provides Present value of $1  →  1 ÷ (1 + r)n
Annuity, years 1 to n  →  [ 1 − (1 + r)−n ] ÷ r

What each bit is

  • r — the discount rate, as a decimal
  • n — the number of years
  • PV factor — what $1 received in year n is worth today
  • Annuity factor — what $1 a year for n years is worth today

Live calculator — read the tables without the tables

PV factor (single sum, year n)—
Annuity factor (years 1–n)—
PV of the cash flow in year n—
PV of that flow each year for n years—
Perpetuity factor (1 ÷ r)—

Where the marks go

  • The perpetuity factor is not in the tables. 1 ÷ r, and for a growing perpetuity 1 ÷ (r − g). APM uses these in valuation and value-based management questions and you have to know them.
  • Annuity factors start in year 1. For a flow starting later, use the annuity factor for the full span and subtract the factor for the years before it starts — or discount the annuity back with a single PV factor.
  • Tables round to three decimals. Your calculator doesn't. Small differences are not errors and examiners allow them; don't waste time reconciling.
Sense check: a PV factor is always between 0 and 1 and falls as n rises. An annuity factor rises with n but can never exceed 1 ÷ r.
From memory — area 1

Divisional performance

The most reliably examined numbers on the paper, and not one of them is given to you.

From memory

ROI and residual income

Not provided — you must know theseROI = controllable profit ÷ controllable capital employed × 100
RI = controllable profit − (capital employed × cost of capital)

What each bit is

  • Controllable profit — before interest and tax, excluding costs the manager cannot influence
  • Capital employed — net assets of the division, often the opening figure
  • Imputed interest — capital employed × the cost of capital

Live calculator

ROI—
Residual income—
Imputed interest charge—
Verdict on a new project earning—

Worked example

Division with $450,000 controllable profit on $2.5m capital employed, cost of capital 12%.

  1. ROI = 450,000 ÷ 2,500,000 = 18%
  2. Imputed interest = 2,500,000 × 12% = $300,000
  3. RI = 450,000 − 300,000 = $150,000

Now offer the manager a project returning 14%. ROI says reject — it drags 18% down. RI says accept — 14% beats the 12% charge and adds to RI. That conflict is the exam question.

Where the marks go

  • The ROI/RI conflict is the point. ROI is a percentage so it penalises any project below the current average, even one that creates value. RI is absolute and goes the right way. Examiners want you to name this as dysfunctional behaviour, not just compute both.
  • Say which profit and which capital. Controllable, traceable or total changes the answer and the fairness of the judgement. State your assumption — it earns the mark even if the examiner used the other one.
  • Old assets flatter ROI. A division with depreciated assets shows a high ROI for no managerial merit. Worth a sentence whenever divisions are compared.
  • RI is in $, ROI is in %. You cannot compare divisions of different sizes on RI alone, which is exactly why the examiner gives you two different-sized divisions.
Sense check: ROI should look like a plausible return — single or low double digits. If RI is positive, ROI must exceed the cost of capital. If those two disagree, you have mixed up a figure.
From memory

Economic value added

Not provided — and the adjustments are the marksEVA = NOPAT − (WACC × capital employed)

What each bit is

  • NOPAT — net operating profit after tax, adjusted
  • WACC — weighted average cost of capital, as a decimal
  • Capital employed — adjusted, and usually the opening figure

Live calculator

Adjusted NOPAT—
Capital charge (WACC × capital)—
EVA—
Value created?—

Worked example

Operating profit $1.2m, $150,000 of R&D written off in the year, cash tax $260,000, opening capital employed $6m, WACC 11%.

  1. Add back the R&D: 1,200,000 + 150,000 = 1,350,000
  2. Deduct cash tax: 1,350,000 − 260,000 = $1,090,000 NOPAT
  3. Capital charge: 6,000,000 × 11% = $660,000
  4. EVA = 1,090,000 − 660,000 = $430,000

Positive EVA — the division earned more than the cost of the capital tied up in it.

Where the marks go

  • The formula is one line; the adjustments are the marks. Add back non-cash items, R&D, advertising and training that build future value, and provisions. Use cash taxes paid, not the accounting charge. Examiners award almost nothing for the subtraction and a great deal for knowing what to adjust and why.
  • Adjust capital employed the same way you adjusted profit. If you capitalise R&D in NOPAT, it has to go into capital employed too — cumulatively, not just this year's.
  • Use opening capital employed. The capital was tied up at the start of the year; that is what it had to earn a return on.
  • Interest is inside WACC, so never deduct it from NOPAT as well. Double-counting finance costs is the single most common EVA error.
  • EVA is absolute, in dollars. Saying “EVA improved” is worth little; saying the division created $430,000 of value above the cost of its capital is worth the mark.
Sense check: EVA and RI should point the same way — they are the same idea with different adjustments. If one is positive and the other strongly negative, check whether you deducted interest twice.
From memory — area 2

Risk & decision rules

No formulas provided anywhere, and rules that have to be reasoned rather than recalled.

Syllabus change — transfer pricing has gone

ACCA has removed transfer pricing from APM in the syllabus running September 2026 to June 2027. The old section C2, Divisional performance and transfer pricing issues, is gone, and with it outcomes C2c, C2d and C2e — when a transfer pricing policy is needed, the alternative bases, and transfer pricing in multinationals.

So there is no transfer pricing calculator on this page any more. If your notes or a revision kit still cover it, they predate the change. It is still examinable at PM, where nothing has moved. ROI, residual income and EVA are unaffected — they simply moved up to outcome A3b.

From memory

Expected values and the decision rules

Not provided — including the rules themselvesEV = Σ (probability × outcome)
Maximin → best of the worst  ·  Maximax → best of the best
Minimax regret → smallest maximum regret

What each bit is

  • EV — the long-run average outcome. Risk neutral.
  • Maximin — the pessimist: pick the option whose worst case is least bad
  • Maximax — the optimist: pick the option with the best best case
  • Regret — what you lost by not picking the best option for that outcome

Live calculator — three outcomes

Probabilities total—
Expected value—
Worst case (maximin looks here)—
Best case (maximax looks here)—

Worked example

30% chance of $500,000, 50% of $250,000, 20% of a $100,000 loss.

  1. (0.30 × 500,000) = 150,000
  2. (0.50 × 250,000) = 125,000
  3. (0.20 × −100,000) = −20,000
  4. EV = 150,000 + 125,000 − 20,000 = $255,000

Note that $255,000 is an outcome that cannot actually happen. That is the point to make about EV.

Where the marks go

  • Probabilities must sum to 1. If they don't, you have missed an outcome or mis-read the question. Check before computing anything.
  • EV is only valid for repeated decisions. For a one-off — and APM decisions are usually one-off — the average is a number that will never occur. Say this and the mark is yours.
  • Regret is measured per outcome, not per option. Build the regret table column by column: within each column, best outcome has zero regret and everything else is the shortfall from it. Then take each option's worst regret and pick the smallest.
  • The rule reveals the attitude to risk. Examiners want you to link the choice to the decision-maker's risk appetite, not just crown a winner.
Sense check: EV must sit between the worst and best outcomes. If it doesn't, a probability or a sign is wrong — losses go in negative.
From memory — area 3

Variances & learning

Brought forward from PM, examined harder here, and still not provided anywhere.

From memory

Market size and market share variances

Not providedMarket size = (budgeted share % × [actual industry − budgeted industry]) × standard margin
Market share = ([actual share % − budgeted share %] × actual industry) × standard margin

What each bit is

  • Market size — the part of the sales volume variance caused by the market growing or shrinking. Largely outside the manager's control.
  • Market share — the part caused by the company winning or losing share. Controllable.
  • Standard margin — contribution or profit per unit, as the question specifies

Live calculator

Market size variance—
Market share variance—
Total sales volume variance—

Worked example

Market grew from 1,000,000 to 1,200,000 units. Our share fell from 20% to 18%. Standard margin $5.

  1. Size: 20% × (1,200,000 − 1,000,000) × $5 = $200,000 favourable
  2. Share: (18% − 20%) × 1,200,000 × $5 = $120,000 adverse
  3. Total volume variance: 200,000 − 120,000 = $80,000 favourable

Overall favourable — but the manager lost share in a growing market. That is the story the examiner wants told.

Where the marks go

  • Size uses budgeted share; share uses actual industry volume. Swap them and the two variances no longer add to the sales volume variance, which is the check the marker applies.
  • A favourable total can hide a failure. Splitting the variance is the entire purpose — a growing market flattering a manager who is losing ground. Never report the total alone.
  • Controllability drives the appraisal. Size is largely uncontrollable, share largely isn't. Say which you would hold the manager to account for.
Sense check: The two variances must sum to the sales volume variance. If they don't, you have mixed budgeted and actual industry volumes.
From memory

The learning curve

Not provided at APM — unlike PMY = axb    where   b = log LR ÷ log 2

What each bit is

  • Y — cumulative average time per unit for x units
  • a — time for the first unit
  • x — cumulative units
  • b — index of learning, always negative

Live calculator

b — index of learning—
Y — cumulative average per unit—
Total time for all x units—
Time for unit x alone—

Worked example

First unit 100 hours, 80% curve, 8 units.

  1. b = log 0.8 ÷ log 2 = −0.3219
  2. Y = 100 × 8−0.3219 = 51.20 hours average
  3. Total = 51.20 × 8 = 409.6 hours
  4. For the 8th alone, repeat for 7 units: 374.1 hours → 409.6 − 374.1 = 35.5 hours

Where the marks go

  • At APM you must know the formula itself, not just apply it — PM candidates get it on screen, you don't.
  • Y is the average, not the total and not the last unit. Multiply by x for the total; do it twice and subtract for the incremental unit.
  • APM asks what it means, not just what it equals. Learning affects pricing decisions, standard setting and whether a variance is really the manager's fault. The calculation is the smaller half of the marks.
Sense check: On an 80% curve, doubling output must give exactly 80% of the previous average — 100 to 80 to 64. If doubling doesn't produce the rate, b is wrong.
Also from memory

And everything else

No calculator needed for these — but nothing on screen to remind you either.

  1. Free cash flow and shareholder value — the basis of value-based management.
  2. Perpetuity and growing perpetuity — 1 ÷ r, and 1 ÷ (r − g).
  3. Profitability ratios — gross and operating margin, ROCE, asset turnover.
  4. Liquidity and gearing — current and quick ratios, debt/equity, interest cover.
  5. Compound annual growth — (end ÷ start)1/n − 1.
  6. Cost of quality — prevention, appraisal, internal failure, external failure.
  7. Value for money — economy, efficiency, effectiveness, for the public sector.
  8. Planning and operational variances — the revised-standard split.
  9. Mix and yield variances, materials and sales.
  10. Target costing and the cost gap, and life-cycle costing.
  11. Throughput accounting ratio — return per factory hour over cost per factory hour.
  12. The frameworks — balanced scorecard, building block model, performance pyramid. Not formulas, but examined every sitting. BCG and Porter's Five Forces have been removed for September 2026 onwards.

On Altman's Z-score: questions normally hand you the model and the coefficients — your marks are in applying and interpreting it, not reciting it. Learn what a score below 1.8 signals, not the five coefficients.

No sheet. So know it cold.

Every formula above turns up in real APM questions — and none of them appear on screen. Go and meet them where the marks are.

Practise APM questions