Business Advisory & Consulting Flashcards
7 cards from real ABA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Business Advisory & Consulting flashcards as text
A client's days sales outstanding (DSO) is 67 days versus an industry benchmark of 38 days. Which advisory action is most appropriate?
Answer: Review credit policies, collection procedures, and identify delinquent accounts for immediate follow-up
Elevated DSO signals collection inefficiencies or overly lenient credit terms; the advisor should audit credit approval criteria and collections follow-up processes.
When facilitating a client's strategic planning session, which facilitation technique is best suited for surfacing hidden assumptions that could undermine the strategy?
Answer: Devil's advocate role assignment or pre-mortem analysis
Pre-mortem analysis and devil's advocate roles explicitly challenge assumptions by imagining failure scenarios before the strategy is implemented, exposing blind spots.
A client operates in a highly competitive market with low switching costs. According to Porter's Five Forces, which force does this scenario most directly amplify?
Answer: Bargaining power of buyers
Low switching costs increase buyer power because customers can easily move to competitors, forcing suppliers to compete more aggressively on price and service.
An advisor recommends activity-based costing (ABC) to a manufacturing client. Compared to traditional costing, ABC is most valuable when:
Answer: Products differ significantly in how they consume overhead resources
ABC provides superior accuracy when products consume overhead resources in different proportions, revealing true product profitability that traditional volume-based allocation distorts.
During a cash flow crisis advisory, a client asks which lever produces the fastest improvement in operating cash flow. Which answer is most accurate?
Answer: Accelerating collections and delaying non-critical payables within vendor terms
Accelerating receivables collections and extending payables timing within terms directly and immediately improves the cash conversion cycle and operating cash flow.
A business advisor is helping a client structure a joint venture. Which governance element is most critical to address upfront to prevent disputes?
Answer: Decision-making authority, profit/loss allocation, and exit rights of each partner
Governance disputes in joint ventures most commonly arise from ambiguous decision rights, inequitable profit sharing, and unclear exit mechanisms, making these the highest-priority items in the formation agreement.
A client asks you to evaluate a proposed acquisition target using the price-to-earnings (P/E) multiple method. The target has trailing earnings of $2.4 million and the industry median P/E is 11x. What is the implied equity value?
Answer: $26.4 million
Implied equity value = earnings × P/E multiple = $2.4M × 11 = $26.4 million.