Gr12 - IB Business Key Terms

__ is an external growth method that involves one company purchasing a controlling interest in another company. The objective is to expand its operations, gain market share, and/or achieve strategic objectives. (hint: Unit 1)

This condition exists when a firm’s sales revenues cover all of its production costs. (hint: Unit 5)

An organization’s spending on the purchase or acquisition of non-current assets or capital equipment, e.g., spending on buildings (premises), machinery, equipment and tools. (hint: Unit 3)

A type of current asset, referring to individual or business customers that owe money to the organization as they have bought goods or services on trade credit, i.e., they need to pay within 30 and 60 days. (hint: Unit 3)

These are cost-saving benefits enjoyed by a business as it increases the size of its operations, i.e., lower average costs (the cost per unit).

(hint: unit 1)

Type of Costs that do not change with the level of output, e.g., loan repayments and management salaries. (hint: unit 3)

A profitability ratio that measures an organization’s gross profit expressed as a percentage of its sales revenue. It is also an indicator of how well a business can manage its direct costs of production. (hint: Unit 3)

Also known as maintenance factors, these are the factors that F. Herzberg argued cause dissatisfaction in the workplace (rather than motivation), so must be addressed.

(hint: Unit 2)

An external growth method that involves two or more organizations agreeing to create a new business entity, usually for a finite period of time.

(hint: unit 1)

Refers to the ease with which a business can convert its assets into cash without affecting its market value, i.e., it measures a firm’s ability to repay short-term liabilities without having to use external sources of finance.

(hint: unit 3)