Paper 2: the quantitative paper

Paper 2 is the quantitative paper. It is built around unseen stimulus material about one or more organisations, and most of its questions ask you to calculate, construct, prepare or comment on numbers: break-even charts, cash flow forecasts, final accounts, ratios, investment appraisal, decision trees. It also tests the definitions and explanations behind them, and ends with a 10-mark extended response in which the numbers become evidence for a judgment.

Students who know the formulas still lose marks on Paper 2 for three reasons: running out of time on the constructions, losing working marks by writing bare answers, and treating the final 10-mark question as a list of advantages and disadvantages. Each has a routine that can be practised in advance: a checklist for every construction, a fixed layout for every calculation and a plan for the extended response.

How the paper is organised

The stimulus is presented in parts. You read a short section about the organisation, answer the questions on it, and then move on to the next section, which adds new information. Each part usually brings its own data: a table of costs, a set of accounts, a forecast, a chart or an infographic. Later parts often build on figures calculated in earlier ones.

• Section A is compulsory. It is a sequence of structured questions on one stimulus: definitions [2], explanations [2]–[4], calculations [2]–[4] and constructions [4]–[6]. At SL it carries 20 marks; at HL it is longer, at 30 marks.

• Section B offers a choice of two questions, and you answer one. Each has its own stimulus, structured parts worth 10 marks and a final 10-mark extended response, so Section B carries 20 marks at both levels. At SL, one of the two options may be about a social enterprise.

• HL content appears only in the HL paper. The SL paper uses SL content from every unit and the toolkit.

A formula sheet is provided, and HL students receive a table of discount factors when a question needs one. A simple calculator is enough, though a graphic display calculator is allowed. Every formula that is not on the sheet, such as break-even quantity, margin of safety, payback period and expected value, must be known by heart.

Time and marks

Paper 2 gives roughly two minutes per mark at both levels. A sensible plan for SL is about 40 minutes on Section A, about 45 minutes on Section B and a few minutes to check. At HL, Section A takes about an hour and Section B about 40 minutes. Within Section B, the structured parts and the 10-mark question deserve roughly equal time, around 20 minutes each.

Reading the stimulus in parts

Because the stimulus arrives in parts, the reading method is different from Paper 1. There is no single long case to annotate before starting; instead, each part is read closely just before its questions are answered. A routine for each part keeps the work quick and accurate.

1. Read the questions on the part first, so you know which figures matter.

2. Read the part once, underlining every number with its unit ($000, units, per month) and anything that limits it ("forecast", "estimated", "assumes", "on credit").

3. Note the business context in a few words: what the organisation sells, its objectives, its problem. The final extended response will need it.

4. Answer the questions on that part, then move on.

5. Carry forward any figure you calculated that later parts may use, by circling it in your answer.

Section A strategy

Most Section A marks are earned by accurate, clearly set-out work. The questions are usually in the order of difficulty within each part, and the marks for a construction are often the largest in the section. Three habits make the most difference.

• Show working everywhere. Write the formula, the figures substituted and the answer with its unit. Markers then award method marks and apply the own figure rule to later parts that use your earlier answer.

• Match the depth to the command term and the marks. A [2] "describe" needs two linked points, not a paragraph of analysis; a [4] "explain two" needs two separate points, each developed and applied.

• Apply every explanation to the business. "A low acid test ratio means the business may struggle to pay its debts" is generic. "With an acid test ratio of 0.92, Harbour Roast would have to sell some of its coffee stock to pay its suppliers on time" earns the application mark.

Constructing charts and statements under time pressure

Constructions carry the most marks per question in Section A and take the most time. Each type has a short checklist of features that markers look for, and practising each one until the layout is automatic saves several minutes in the exam.

Break-even chart

A break-even chart shows fixed costs (FC), total costs (TC) and total revenue (TR) against output. Only two points are needed for each straight line, so the chart can be drawn quickly once the scale is chosen.

1. Calculate first: break-even quantity, the value of TC and TR at the maximum output on the chart, and the margin of safety if it is asked for.

2. Choose the scales: output from 0 to a round figure above the forecast output; costs and revenue from 0 to just above TR at that output.

3. Draw and label the axes: "Output (units)" (or bags, meals, customers) and "Costs and revenue ($)".

4. Draw three lines with a ruler: FC as a horizontal line; TC from FC on the vertical axis to its value at maximum output; TR from the origin to its value at maximum output. Label each at its end.

5. Mark the break-even point with dashed lines to both axes and its values, and the margin of safety as a horizontal measure from break-even quantity to forecast output.

6. Give the chart a title.

The model chart has every feature on the checklist. A chart without a title, with unlabelled lines or with the break-even point read off by eye at the wrong value typically loses one mark for each missing feature, even when the lines themselves are correct.

Cash flow forecast

A cash flow forecast must be in the IB layout: the unit in the top-left cell, months as columns, and the rows in a fixed order. Negative figures go in brackets. The quickest method fills one month at a time, top to bottom, because each closing balance is the next month's opening balance.

The forecast shows a negative closing balance of $4,000 in February, when the roaster is paid for. A follow-up question would usually ask for a comment: Harbour Roast is cash-positive in January and March, so the problem is a single month caused by one large payment. An overdraft agreed in advance, paying for the roaster in instalments or delaying the purchase by a month would each solve it.

Statements of profit or loss and financial position

Questions ask you to prepare a statement of profit or loss or statement of financial position from a list of figures, or to complete one with missing values. The layout must be the IB's, with its line names in its order, so learning it as a fixed template is the fastest approach. Work down the statement, subtracting line by line, and finish with a check.

Harbour Roast Ltd's statement of financial position at the end of 2025 has four missing figures, marked w, x, y and z.

Statements have their own traps. The final figure of a statement of profit or loss for a non-profit organisation is a surplus, not a profit, and it pays no dividends. In the statement of financial position, accumulated depreciation is subtracted from property, plant and equipment, and a bank overdraft is a current liability, however long it has been in place.

Position map

A position map is constructed from data: ratings of several brands on two dimensions, such as price and quality. Two axes cross in the centre, each labelled at both ends. Each brand is plotted from its pair of ratings and labelled with its name, and a gap in the market can be marked.

BCG matrix from data

Constructing a BCG matrix from data starts with a calculation: the relative market share of each product, its market share divided by that of its largest competitor. Each product is then placed by its relative market share (above or below 1) and its market growth rate (above or below the dividing rate the question gives, often 10%).

Nuvo Foods makes four products. Its market research gives the data in the table.

Decision tree

A decision tree question usually gives the options, costs, probabilities and outcomes in words, and asks you to construct the tree and calculate the expected value of each option. Squares are decision nodes, circles are chance nodes, and the rejected option is crossed out with two short lines.

"Comment on your answer" questions

Many calculations are followed by a [2] "comment" or "explain what your answer shows". These marks are often dropped because the answer only restates the number. A comment is a judgment based on the result, and a strong one has three parts.

1. Compare the figure with something: last year, a competitor, a target, the industry, a rule of thumb (a current ratio of 1.5–2, an acid test of about 1).

2. Interpret what it means for the business: can it pay its debts, is the project worth it, is the margin of safety comfortable?

3. Qualify it with a limitation or the next step, where marks allow: the figure is a forecast, one ratio alone can mislead, the business could act in a certain way.

A worked Section A

A complete Section A sequence on an invented company follows, in the order the paper would present it, with model answers. Cover the answers and attempt each part first under timed conditions: about 2 minutes per mark.

The sequence shows how a Section A develops. Part 1 tests break-even, part 2 adds the accounts and liquidity, part 3 adds marketing data, and every figure points towards the same business problem: a company with a thin profit margin and weak liquidity trying to grow. A good Section B response on Lumo would use all of them.

Section B: choosing and answering

Section B gives a choice of two questions. Choose by the 10-mark part, because the extended response carries half the marks of the question, and a question whose final part you can argue well is worth more than one whose calculations look easier. Then work through the structured parts quickly and accurately, leaving about 20 minutes for the extended response.

The extended response is marked against the same markbands as Paper 1, Section B. On Paper 2 the stimulus is full of numbers, so the evidence for every argument should be quantitative wherever possible: the payback period, the margin of safety, the ratios, the NPV. The top band also requires balanced arguments and an explanation of the limitations of the stimulus, which on Paper 2 almost always means the reliability of forecasts and estimates.

• Introduction (2–3 sentences): define the key term and state the decision the business faces.

• Analysis of option or argument 1: the figures that support it, interpreted, with a tool or theory where relevant.

• Analysis of option or argument 2: the figures that support the alternative, with its risks.

• Qualitative factors: objectives, stakeholders, finance, risk, the key concepts where they fit.

• Limitations of the stimulus: which figures are forecasts or estimates, what is missing.

• Conclusion or recommendation: a clear judgment that follows from the analysis, with what it depends on.

The structured parts give a clear trade-off. Project A pays back about seven months sooner, while Project B has the higher ARR. The 10-mark part asks you to weigh exactly this trade-off against Brightline's situation.

Paper 2 at HL (HL only)

The method is the same at HL, but Section A has more questions and draws on HL calculations and constructions. Typical HL items are a stock control chart to construct, a critical path network to complete with earliest start and latest finish times and floats, a depreciation schedule, a budget with variances to calculate and label, and an NPV using the discount table provided. Extended responses at HL may also ask for a recommendation between competing strategic options.

Common mistakes on Paper 2

Before and during the exam

• To do:

  I know every formula that is not on the formula sheet and the unit of each answer.

• To do:

  I can draw a fully labelled break-even chart in under ten minutes.

• To do:

  I can prepare a cash flow forecast, a statement of profit or loss and a statement of financial position in the IB layout from memory.

• To do:

  I can construct a position map, a BCG matrix from data and a decision tree.

• To do:

  I write the formula and working for every calculation, and label every answer.

• To do:

  I comment on results by comparing, interpreting and qualifying.

• To do:

  I choose my Section B question by its 10-mark part.

• To do:

  My 10-mark answers use the figures, show balance, explain the limitations of the stimulus and end with a justified judgment.