CTA Strategic Planning & Business Model Assessment

Question 1

In a corporate turnaround, what is the first step in strategic assessment before developing a recovery plan?

Accepted Answer

Conduct a root cause analysis to determine whether the problems are operational, financial, or strategic in nature

Answer

Immediately implement across-the-board cost cuts

Answer

Hire a new CEO

Answer

File for Chapter 11 bankruptcy protection

Question 2

A '5 Forces Analysis' in a distressed context helps the turnaround professional assess:

Accepted Answer

The structural attractiveness of the industry and whether the core business can be competitive long-term

Answer

The company's five largest creditors

Answer

The five most profitable product lines

Answer

The five steps of the restructuring plan

Question 3

Which scenario most strongly suggests a business model problem rather than a temporary financial problem?

Accepted Answer

Secular decline in customer demand due to technological disruption of the company's core product

Answer

A short-term spike in raw material costs

Answer

A one-time legal settlement reducing cash reserves

Answer

A temporary tightening of credit markets

Question 4

A SWOT analysis in a turnaround context is most useful for:

Accepted Answer

Identifying internal capabilities that can be leveraged and external opportunities that can support recovery

Answer

Calculating the present value of debt obligations

Answer

Determining the order of creditor priority

Answer

Analyzing the tax implications of debt cancellation

Question 5

When evaluating whether to pursue 'going concern' restructuring versus liquidation, the decisive factor is:

Accepted Answer

Whether the going-concern enterprise value exceeds the liquidation value, making reorganization economically rational

Answer

Whether the company has any debt outstanding

Answer

Whether the original founders still own equity

Answer

Whether the company has been profitable in the past five years

Question 6

In strategic turnaround planning, 'core versus non-core' analysis is performed to:

Accepted Answer

Identify businesses or assets that can be divested to generate cash and allow management to focus on viable operations

Answer

Separate debt from equity on the balance sheet

Answer

Determine the organizational reporting structure

Answer

Calculate the tax basis of each business unit