TMA Operational Turnaround 2

Question 1

What is a '100-day plan' in the context of a turnaround engagement?

Accepted Answer

A structured short-term action plan to achieve critical stabilization milestones

Answer

A 100-day plan outlines the specific actions, owners, and milestones a turnaround team commits to achieving in the first three months to stabilize and begin improving the business.

Question 2

Why is supplier relationship management critical during an operational turnaround?

Accepted Answer

Maintaining supplier trust preserves the supply chain needed to continue operations

Answer

If suppliers lose confidence in a distressed company and tighten credit terms or stop shipments, it can accelerate the crisis by disrupting production and revenue.

Question 3

What is a 'contribution margin' analysis used for in operational turnaround?

Accepted Answer

Identifying which products or customers generate positive cash flow after variable costs

Answer

Contribution margin analysis reveals which products, services, or customer segments cover their variable costs and contribute to fixed cost recovery, guiding resource allocation.

Question 4

In a turnaround, what does 'customer concentration risk' refer to?

Accepted Answer

Excessive revenue dependence on a small number of customers

Answer

Customer concentration risk means a distressed company relies on few customers for most of its revenue, making it highly vulnerable if those customers reduce orders or leave.

Question 5

Which of the following best describes 'zero-based budgeting' in a turnaround context?

Accepted Answer

Building the budget from zero, justifying every expense from scratch

Answer

Zero-based budgeting requires managers to justify every line of expenditure from scratch rather than assuming prior-year spending is appropriate, exposing unnecessary costs.

TMA - Turnaround Management Association Practice Test

TMA - Turnaround Management Association Practice Test

TMA Operational Turnaround 2