CA Inter FM SM mock test paper Jan 2027: FM traps, SM marks
A CA Inter FM SM mock test paper for January 2027 is really two papers stapled together: Section A, Financial Management, is 50 marks of mostly numericals, with theory mainly in one optional question, and Section B, Strategic Management, is 50 marks of case-based theory. Give each section 90 minutes and no more. Then check the FM half for the formula traps ICAI's examiners caught in May 2026, and the SM half for whether every point is tied to the case.
Paper 6 closes Group II. ICAI's January 2027 notice (PDF) (opens in a new tab) fixes Group II for 8, 10 and 12 January 2027, 2 PM to 5 PM, reading time starting at 1:45 PM. It lists group dates only. If ICAI keeps the number order it followed in September 2026, FM and SM falls on Tuesday 12 January, the last day of the whole Inter exam.
CA Inter FM SM mock test paper: the two halves ICAI sets
Your mock should print the same skeleton as ICAI's May 2026 paper, which you can read in full in the Paper 6 suggested answers (PDF) (opens in a new tab):
| Section A: FM (50) | Section B: SM (50) | |
|---|---|---|
| MCQs | Q1 to Q8: a 5-MCQ case on capital structure and EPS, then 3 single MCQs (receivables, CAPM, IRR) | Q9 to Q16: a 5-MCQ case on one company's strategy, then 3 single MCQs |
| MCQ marks | Seven of 2, Q8 of 1 = 15 | Seven of 2, Q16 of 1 = 15 |
| Compulsory | Q1, three numericals of 5 marks | Q5, three caselets of 5 marks |
| Choice | Any two of Q2, Q3, Q4 (10 each) | Any two of Q6, Q7, Q8 (10 each) |
| Theory | Q4 only: 4 + 4 + 2, OR on (c) | Everything |
Two details change how you sit the paper. First, all eight FM MCQs in May 2026 needed a calculation, even the 1-mark IRR one, so Part I of FM is slow. Second, FM printed "Working notes should form part of the answer", while SM's instruction simply asks for Q5 plus any two of the remaining three. The OMR sheet and both answer books are explained in our CA Inter exam pattern for Jan 2027.
Syllabus: for this attempt, the study material notice (PDF) (opens in a new tab) from ICAI lists Paper 6A (FM, Modules 1 and 2) and Paper 6B (SM) as the July 2024 editions, reprinted from August 2025, plus ICAI's RTP for January 2027. Unlike Taxation, ICAI lists no Statutory Update for Paper 6, so its 2026 papers work as full mocks as printed.
Time split for the FM SM paper: 90 minutes each, used differently
FM eats time in Part I; SM eats time in writing. So the two 90-minute halves shouldn't be divided the same way. This is our suggested split, not ICAI's:
| Clock (afternoon) | FM, 2:00 to 3:30 | SM, 3:30 to 5:00 |
|---|---|---|
| MCQs | 25 min for 8 numerical MCQs | 20 min for 8 case MCQs |
| Compulsory question | 28 min for Q1's three sums | 30 min for Q5's three caselets |
| Two optional questions | 32 min | 36 min |
| Last look | 5 min: units and a decision line under each sum | 4 min: every bracket answered |
Three rules that protect the split:
- Pick your two FM optionals in reading time. In May 2026, Q4 was the theory question (MM assumptions, post-shipment finance, profit vs wealth maximisation). If your theory is thin, choose Q2 and Q3 before 2 PM and don't look back.
- At 3:30 PM, stop FM mid-sum if you must. Leave a line ("contd. after SM") and space below it. The first marks of each SM answer usually come faster than the last few of a stuck FM sum.
- Write the SM MCQs after reading the case once. In May 2026, MCQs 9 to 13 all came from a single company's story, so one careful read answers five.
For where Paper 6 sits among your Group II mocks, with Cost and Audit, see the CA Inter Jan 2027 mock test plan.
CA Inter FM formula sheet: 6 traps ICAI's examiners caught
Every row below comes from ICAI's examiners' comments on Paper 6A, in the May 2026 Group II volume (PDF) (opens in a new tab), pages 110 to 113, or from the January 2026 summary (PDF) (opens in a new tab). Put these lines at the top of your FM formula sheet.
| # | Where it went wrong (ICAI's rating) | The formula or step that fixes it |
|---|---|---|
| 1 | May 26 Q1(a), the leverage sum: "Most examinees were unable to calculate the current level of sales correctly" (Below Average) | Change in sales = change in operating profit ÷ P/V ratio; current sales = change in sales ÷ % change. Worked below |
| 2 | May 26 Q1(c), ratio analysis: rate of preference dividend wrong, so PAT wrong too (Below Average) | Total dividend cover = PAT ÷ (equity dividend + preference dividend). Write PAT as 6,00,000 + P and solve for P |
| 3 | May 26 Q2(b), cash discount: "failed to calculate the applicable financing cost" (Below Average) | Borrow the discounted amount, only for the credit period minus the discount period, and take both the discount and the interest after tax |
| 4 | May 26 Q3(b), cash cycle: minimum cash under the new scheme wrong (Below Average) | Cash cycle = debtor days + inventory days − creditor days; minimum cash = (sales − net profit) ÷ cash turnover |
| 5 | Jan 26 Q1(b), factoring: effective cost and the accept-or-reject call (Below Average) | Net cost = commission + factor's interest − savings (bad debts, administration); rate = net cost ÷ advance actually paid; reject if cost beats savings |
| 6 | Jan 26 Q3(a), external funds required: amount and its sources (Below Average) | Increase in assets − increase in payables and provisions − retained earnings added |
ICAI's own numbers for trap 3. The supplier offered 2% off an invoice of 75,000 for paying in one month instead of three. ICAI's answer: discount 1,500, or 1,050 after 30% tax; borrow 73,500 on a 10% overdraft for two months, which costs 1,225, or 857.50 after tax; net saving 192.50, so accept. A student who took interest for three months, or on 75,000, got a different decision, and the decision is where the marks were.
ICAI's own numbers for trap 4. Debtors 60 days + inventory 90 − creditors 30 = a cash cycle of 120 days, so cash turns over 3 times. Cash outlay is 200 lakhs of sales less 20 lakhs of profit, 180 lakhs, so minimum cash is 60 lakhs. Cutting debtors to 30 days gives 90 days, 4 turns and 45 lakhs. Then the scheme still lost money: a saving of 1.26 lakhs against a discount cost of 1.68 lakhs, both after tax.
The one FM numerical students handled well in May 2026 was the convertible debenture (Q1(b), Above Average): compare the conversion value with the redemption value first, then discount whichever holders would choose.
Worked mini-example: leverages from a change in profit
This is trap 1 with our own figures, solved the way ICAI's May 2026 answer solves it, then checked against ICAI's result.
Facts (ours): a 10% rise in sales lifts operating profit by 24,000. Contribution is 30% of sales, fixed operating cost is 1,20,000 a year and interest is 40,000.
Step 1, working note on sales. Operating profit rises only by the extra contribution, so:
| Line | Working | Amount |
|---|---|---|
| Change in sales | 24,000 ÷ 0.30 | 80,000 |
| Current sales | 80,000 ÷ 10% | 8,00,000 |
Step 2, income statement.
| Particulars | Amount |
|---|---|
| Sales | 8,00,000 |
| Contribution (30%) | 2,40,000 |
| Less fixed operating cost | 1,20,000 |
| EBIT | 1,20,000 |
| Less interest | 40,000 |
| EBT | 80,000 |
Step 3, leverages. Operating leverage = contribution ÷ EBIT = 2,40,000 ÷ 1,20,000 = 2. Financial leverage = EBIT ÷ EBT = 1,20,000 ÷ 80,000 = 1.5. Combined leverage = 2 × 1.5 = 3, which also equals contribution ÷ EBT.
Step 4, the 20-second check. Operating leverage of 2 means EBIT should move by twice the change in sales: 2 × 10% = 20%, and 20% of 1,20,000 is 24,000, the figure in the question. If your check fails, the sales figure is wrong, and so is everything after it.
ICAI's own answer passes the same check. In May 2026, a 5% sales rise gave 9,000 more operating profit at a 40% contribution margin, fixed cost 1,35,000 and interest 30,000. ICAI got sales of 4,50,000, EBIT 45,000, EBT 15,000, and leverages of 4, 3 and 12. Check: 4 × 5% = 20%, and 20% of 45,000 is 9,000.
The tempting slip: 9,000 ÷ 5% = 1,80,000. That is the contribution, not the sales. Keep the P/V ratio in the first line and you can't make it.
How SM answers are marked: read the bracket
ICAI doesn't publish a marking scheme for Strategic Management, but each SM question prints its split, and ICAI's suggested answer follows that split exactly. Treat the bracket as your answer plan.
Take May 2026 Q5(a), marked (1 + 3 + 1). A company first readies wary staff with awareness sessions, rolls out new methods in phases, then locks them in with revised policies and rewards. ICAI's answer:
| Marks | What the question asked | What ICAI's answer wrote |
|---|---|---|
| 1 | Identify the model | Kurt Lewin's three-phase model of change |
| 3 | Explain the phases | Unfreezing, changing, refreezing; under each, one sentence starting "In the given case…" |
| 1 | Is it a one-time process? | No; change keeps repeating as the environment shifts |
ICAI's examiners rated it Average: "Most examinees were able to identify the phases but could not correctly identify the model", and they couldn't "explicitly relate the phases" to the case. So a student who knew the three phases still lost both the naming mark and much of the application.
The same shape ran through Q5. Q5(b), (1 + 1 + 3): name the generic strategy (differentiation), explain it, then three disadvantages; examiners found the disadvantages weak. Q5(c), (1 + 3 + 1): stability strategy, reasons, then whether it suits a start-up; most missed that last mark.
An SM answer that earns its marks, in four moves:
- Name it in the first line, in the study material's words: the model, strategy or tool.
- Explain in short headed points, one per mark.
- Apply each point with a fact from the case, copied from the question.
- Close the last bracket: the judgement, limitation or "is it suitable" the question asked for.
Where a question gives no case, as in May 2026's Q8(a) on strategic uncertainty, ICAI still wanted analysis, not a list. The examiners rated it Poor because responses "lacked analytical depth". For SM, step marking works point by point; see step marking in CA exams.
ICAI examiner comments for Paper 6A and 6B
FM went wrong in the first derived figure; SM went wrong in application. May 2026, question by question:
| Paper 6A, FM | Rating | Paper 6B, SM | Rating | |
|---|---|---|---|---|
| Q1(a) leverages | Below Average | Q5(a) Lewin's change model | Average | |
| Q1(b) cost of convertible debentures | Above Average | Q5(b) differentiation | Above Average | |
| Q1(c) ratios, preference dividend | Below Average | Q5(c) stability strategy | Good | |
| Q2(a) NPV, PI, equivalent annual NPV | Above Average | Q6(a) characteristics of products | Below Average | |
| Q2(b) cash discount | Below Average | Q6(b) corporate-level strategies | Average | |
| Q3(a) Walter and Gordon | Good | Q7(a) reasons to globalise | Average | |
| Q3(b) cash cycle, minimum cash | Below Average | Q7(b) channels | Above Average | |
| Q4(a) MM dividend assumptions | Poor | Q8(a) strategic uncertainty | Poor | |
| Q4(b) post-shipment finance | Poor | Q8(b) objectives and limits; OR proactive vs reactive | Average; OR Poor | |
| Q4(c) profit vs wealth maximisation; OR junk bonds | Average; OR Good |
What repeats from January 2026, in the January 2026 Group II summary (PDF) (opens in a new tab): FM theory was Poor twice again (financial leverage as a "double edged sword", and seed capital assistance), working capital was Below Average again (factoring), and in SM corporate culture and strategic performance measures were both Poor. FM's Q4 theory and working capital numericals have now been weak in two attempts running.
Paper-by-paper comments for all six Inter papers are in ICAI examiner comments for CA Inter May 2026, and every paper's ICAI answer file is linked in CA Inter suggested answers May 2026 PDF.
CA Inter FM important questions and SM important questions
In FM, working capital is the steadiest big chapter; in SM, no chapter can be dropped. Counting ICAI's four papers from September 2025 through September 2026 (method and tables in CA Inter chapter wise weightage for Jan 2027), working capital took 9 to 11 printed marks every time, investment decisions, ratios and cost of capital are the other A chapters, and each of the five SM chapters took 9 to 14 marks in every paper. ICAI's own section-wise weightage (PDF) (opens in a new tab) gives FM's financing decisions and cost of capital 45% to 50%.
So each full mock should carry at least one working capital sum, one capital budgeting sum with a decision line, one cost of capital or leverage sum, and FM theory from Q4's usual pool (scope, types of financing, dividend theory). In SM, it needs one caselet from each chapter. For the week each chapter gets revised, follow the CA Inter revision planner for January 2027.
Our CA Inter FM and SM mock tests
Our CA Inter FM and SM test series gives you 3 full-syllabus Paper 6 mocks for January 2027, pitched at the real ICAI exam standard and following ICAI's newest pattern; each one tests every amendment applicable to this attempt. You get one checked submission per paper: write both sections by hand, photograph the pages, make one PDF and upload it. The checked copy comes back within 24 hours, and every mark cut carries its reason plus the line that would have earned it, which suits both an FM working note and an SM point that missed the case. The official solution opens after you submit. Mock 1 has preview pages on the subject page.
Frequently asked questions
How should I divide time between FM and SM in the CA Inter paper?
Ninety minutes each, with FM first as printed. Inside FM, allow more time for the MCQs, because in May 2026 all eight needed a calculation; inside SM, allow more for writing the three Q5 caselets.
Is CA Inter SM case-based?
Mostly. In May 2026, five of the eight SM MCQs came from one case and all three parts of compulsory Q5 were caselets. Q6 to Q8 mixed quotation-led questions with short situations, and ICAI still expected analysis rather than a memorised list.
Are ICAI's MTPs enough as FM SM mock test papers?
Write them first: they cost nothing and follow today's pattern, and ICAI's files are listed paper by paper in our CA Inter free resources. You mark them yourself, though, and SM application marks are hard to judge on your own copy.
Do I need 40 marks in FM and SM separately?
No. Paper 6 is one 100-mark paper, and you need 40 in it, plus 150 out of 300 across Group II; see CA Inter passing marks Jan 2027.
Write one half this week
Take ICAI's May 2026 Paper 6, write Section A alone in 90 minutes, and run the leverage check and the six traps over your copy. Then do the same with Section B, using the four SM moves. When you're ready for full CA mock tests with a checked copy, start on the CA Inter FM and SM page, see all of CA Inter Group II, or browse every level of our CA test series.