TMA Introduction to Business 3

Question 1

Which type of business entity provides its owners with limited personal liability while allowing pass-through taxation?

Accepted Answer

Limited Liability Company (LLC)

Answer

An LLC combines liability protection of a corporation with the pass-through tax treatment of a partnership.

Question 2

In turnaround management, a '13-week cash flow forecast' is used to:

Accepted Answer

Monitor near-term liquidity and manage cash on a weekly basis

Answer

The 13-week cash flow forecast is a standard turnaround tool that provides granular visibility into weekly cash inflows and outflows.

Question 3

What does 'working capital' measure?

Accepted Answer

Current assets minus current liabilities

Answer

Working capital (current assets minus current liabilities) measures a company's short-term operational liquidity.

Question 4

A company operating in a 'mature' industry phase is most likely to face:

Accepted Answer

Intense competition, margin compression, and slower growth

Answer

Mature industries typically exhibit slower growth, fierce competition, and shrinking margins, increasing vulnerability to distress.

Question 5

Which of the following best describes 'operational restructuring' in a turnaround?

Accepted Answer

Reducing costs and improving efficiency in core business operations

Answer

Operational restructuring focuses on improving the underlying business through cost cuts, process improvements, and performance optimization.

TMA - Turnaround Management Association Practice Test