TMA Crisis Management

Question 1

What is the first step a turnaround professional should take when engaged with a deeply distressed company?

Accepted Answer

Conduct a rapid diagnostic to assess the severity of the crisis and available options

Answer

File for bankruptcy immediately

Answer

Issue a press release to reassure stakeholders

Answer

Negotiate with creditors before reviewing operations

Question 2

What is a 'liquidity crisis' in the context of corporate distress?

Accepted Answer

A situation where a company cannot meet its short-term cash obligations as they come due

Answer

A company running out of new product ideas

Answer

A legal term for insolvency under state law

Answer

A drop in long-term asset values

Question 3

Which of the following best describes 'stakeholder communication' in a crisis?

Accepted Answer

Proactively managing the message to key constituencies to maintain confidence and cooperation

Answer

Issuing legal notices only when required

Answer

Communicating only with shareholders

Answer

Delegating all communication to outside counsel

Question 4

What is a 'going concern' opinion from an auditor?

Accepted Answer

An auditor's warning that substantial doubt exists about the company's ability to continue operating

Answer

A clean audit opinion with no issues

Answer

A court order to continue operations during bankruptcy

Answer

A lender's commitment to fund the company

Question 5

In crisis management, what does 'triage' refer to?

Accepted Answer

Prioritizing the most urgent issues that need immediate attention to prevent collapse

Answer

A legal filing process

Answer

A method of creditor negotiation

Answer

A performance review process for management

Question 6

What is 'reputational risk' in a corporate crisis?

Accepted Answer

Damage to a company's brand and stakeholder trust that can accelerate business decline

Answer

The risk of losing trademark protection

Answer

A legal liability from past misconduct only

Answer

Risk from social media marketing campaigns