Operational Turnaround Flashcards

What is the first priority in an operational turnaround engagement?

Answer: Stabilizing cash flow and stopping the bleeding

The immediate priority in any operational turnaround is to stabilize cash flow by identifying and stopping cash drains before implementing longer-term improvements.

Which of the following is a common quick-win operational cost reduction in a turnaround?

Answer: Reducing discretionary spending and eliminating non-core activities

Eliminating discretionary spending and non-core activities delivers fast cash preservation with minimal disruption to core revenue-generating operations.

What does SKU rationalization mean in an operational turnaround?

Answer: Reducing the number of products offered to focus on the most profitable ones

SKU rationalization involves eliminating unprofitable or slow-moving products to simplify operations, reduce inventory, and focus resources on the highest-margin offerings.

What is a key performance indicator (KPI) dashboard used for in a turnaround?

Answer: Providing management real-time visibility into critical operational and financial metrics

A KPI dashboard gives turnaround management real-time visibility into critical metrics so they can quickly identify problems and take corrective action.

In turnaround management, what does 'rightsizing' the workforce mean?

Answer: Reducing headcount to align staffing levels with current business needs

Rightsizing aligns the workforce size with the company's actual revenue and operational needs, eliminating excess overhead during a period of financial stress.

What is the purpose of a 'working capital optimization' initiative in a turnaround?

Answer: Free up cash trapped in receivables, inventory, and payables

Working capital optimization releases cash from operational sources — collecting receivables faster, reducing inventory, and extending payables — without requiring external financing.