IB Business Paper 2 Prep

Income statement(11)

Revenue

- Cost of goods Sold

=Gross Profit

-Overheads

=Net Profit or Profit before tax and interest

-Interest

=Pre-tax profits

-Tax @ %

=Profit after tax

-Dividendeds to shareholders

=Retained profit

Profit Loss Account

Net Profit or Profit before tax and interest

-Interest

=Pre-tax profits

-Tax @ %

=Profit after tax

Define liquidity

1. How quickly a person or organization has cash to meet immediate and short-term obligations, or assets that can be quickly converted to do this.

2.Accounting: The ability of current assets to meet current liabilities.

3.Investing: The ability to quickly convert an investment portfolio to cash with little or no loss in value.

Break-even chart(6)

Output

Fixed Costs

Variable Costs

Total Costs

Revenue

Profit/Loss

Revenue formula

Price x Quantity

Margin of safety

when the output level exceeds the break even level of output

Boston Matrix

a method of analyzing the product portfolio of a business in terms of market share and market growth

Low market growth with high market share

Cash Cow

High market growth with high market share

star

high market growth with low market share

problem child

low market growth with low market share

dog

Market share

measure of a products ability to generate cash

Market growth

Market growth is an inadequate measure of a market's attractiveness

Autocratic/ dictorial(3)

-One person decides

-Fast decisions

-Effective in crisis

Democratic(4)

-All discuss. All decide

-Many ideas

-Slow

-Ineffective in crisis

Laissez Faire (3)

-Manager lets workers do as they like

-Lacks control

-Demotivating

Situation Leadership(1)

-Takes over in a particular situation

Taylor's scientific management(5)

-Studied factories in 1900s

-Believed workers were lazy, motivated by money$

-Studied individual tasks

-Found most effective way to do task

-Managers should be appointed to be sure tasks are done exactly as planned

Maslow's Hierarchy of Needs(5)

1. Self Actualization

2. Self-esteem

3. Love & belonging

4. Safety

5. Physical survival(needs)

McGregor's Theory X (5) and Y (2)

Theory X: workers lazy, dislike work, lack ambition, motivated by $, need to be controlled by managers

Theory Y: Workers can take pride in and responsibility for their jobs. Managers should encourage them.

Herzberg's Hygiene Factors

Hygiene factors = things that B has to provide or workers will be dissatisfied = potential demotivators

Motivating factors = things which will encourage workers (praise, advancement)

Cash Flow Forecast(6)

-Months

-Sales

-Total $ in

-Total $ out

-Net Cash Flow

-Opening and closing balance

Net Cash Flow

$ in - $ out

Closing Balance

($ in - $ out) + Balance

Job production

make one completely then make another one

Flow production

split into consecutive standardized processes

Line production

assembly line, often with conveyor belt

Batch production

use same equipment for a set of same products , then reuse same equipment for different products

Just-in-case and just-in-time production

Just-in-case=keep a bit extra in case needed

Just-in-time=order to arrive only when need it and only make it when B can deliver it to a firm sale