IB Business Management Higher Level Paper 2 Review

Vocabulary practice flashcards covering business management concepts, formulas, and terminology from the HL Paper 2 examination paper.

Gearing ratio

A financial metric that measures the proportion of a company's capital employed that is financed by long-term borrowing (non-current liabilities).

Debtor days

An efficiency ratio that measures the average number of days it takes for a business to collect outstanding cash payments from its credit customers.

Trade receivables

The amounts of money owed to a business by customers who have purchased goods or services on credit terms.

Trade payables

The short-term obligations and debts owed by a business to suppliers for raw materials, goods, or services purchased on credit.

Quality control

A traditional quality management approach centered on inspecting and testing completed goods at the end of the production process to identify and reject defective products.

Quality assurance

A preventive quality management approach where standards and procedures are incorporated into every stage of the design and production process to prevent defects from occurring.

Capacity utilization rate

The percentage of a firm's total potential productive output capacity that is currently being used in operations.

Cost to make

The total financial expenditure incurred by manufacturing a product in-house, consisting of variable production costs plus any additional fixed costs incurred.

Cost to buy

The total financial cost incurred when purchasing goods or services from an outside vendor, calculated as $\text{Price per unit} \times \text{Quantity}$.

Sales forecasting

A quantitative and qualitative management tool used to predict future sales revenue and product volume over a specified time horizon.

Line of best fit

A line drawn through scatter plot data points showing the general direction and statistical trend of historical data to allow for extrapolation and forecasting.

Contribution per unit

The portion of revenue from selling one unit that goes toward covering fixed overheads and contributing to operating profit, calculated as $\text{Selling price per unit} - \text{Variable cost per unit}$.

Total contribution

The total amount of money remaining after all variable costs are deducted from sales revenue, calculated as $\text{Contribution per unit} \times \text{Units sold}$.

Organizational culture

The shared set of values, beliefs, attitudes, traditions, and behavioral norms that influence how an organization's members interact and execute work.

Role culture

A type of corporate culture defined by clear hierarchies, formal rules, standardized operating procedures, and job roles that are prioritized over individual employees.

Crisis management

The systematic response, communication, and immediate operational measures implemented to handle an unexpected, catastrophic event that threatens an organization.

Contingency planning

The advance preparation of alternative strategies, resources, and protocols designed to respond to potential future risks or emergency scenarios.

Variance

The financial numerical difference between planned or budgeted performance and the actual financial outcomes recorded, classified as favorable or adverse.

Intangible assets

Non-physical assets with long-term commercial value owned by a business, such as patents, copyright licenses, proprietary software code, trademarks, and brand reputation.

Net present value (NPV)

An investment appraisal technique that calculates the sum of all discounted future net cash inflows minus the initial cost of investment.

Discount factor

A decimal multiplier applied to future cash inflows to adjust them back to their equivalent present-day monetary value based on an interest or discount rate.

Labour turnover rate

The percentage of a company's workforce that departs during a specified period relative to the total number of employees.