TMA Financial Restructuring 3

Question 1

What is a '13-week cash flow forecast' used for in turnaround management?

Accepted Answer

Monitoring near-term liquidity and cash runway during a crisis

Answer

Long-term strategic planning

Answer

Projecting annual revenue growth

Answer

Filing quarterly SEC reports

Question 2

What is the difference between a 'going concern' and a 'liquidation' valuation?

Accepted Answer

Going concern assumes continued operations; liquidation assumes immediate asset sale

Answer

Liquidation always produces a higher value

Answer

Going concern uses book value; liquidation uses market value

Answer

They are the same for distressed companies

Question 3

Which of the following is a key indicator that a company may be in financial distress?

Accepted Answer

Consistent covenant breaches and negative free cash flow

Answer

Declining debt-to-equity ratio

Answer

Rising stock price

Answer

Expanding EBITDA margins

Question 4

What role does an independent business review (IBR) play in restructuring?

Accepted Answer

It provides an objective assessment of a company's financial position and viability for creditors

Answer

It replaces the audit firm

Answer

It is filed with the bankruptcy court automatically

Answer

It is prepared only by management

Question 5

What is a 'cram-down' in Chapter 11 bankruptcy?

Accepted Answer

Confirming a reorganization plan over the objection of dissenting creditor classes

Answer

Forcing employees to accept pay cuts

Answer

Forcing the debtor to liquidate immediately

Answer

A tax penalty assessed during restructuring

Question 6

What is the significance of EBITDA in distressed company analysis?

Accepted Answer

It approximates operating cash flow used to assess debt repayment capacity

Answer

It measures stock price performance

Answer

It is the legal standard for insolvency

Answer

It replaces the 13-week cash flow forecast