Business Failure and Harvesting

Which of the following best describes a business in “distress”?

• A venture that has failed completely

• A business facing performance challenges but still capable of recovery

• A business that has met all of its financial goals

• A new business still in its start-up phase

Which of the following is not a key factor of business success?

• Attitude and motivation

• Positioning

• Employee satisfaction

• Cash flow

In the economic model P = ΣN[S - C] - F, what does N represent?

• Number of products sold

• Fixed costs

• Selling price per unit

• Net profit

A decline in gross margin over three consecutive months is an example of:

• A strategic issue

• A sign of distress

• A poor management decision

• Overtrading

What is a common cause of business failure?

• Misunderstood positioning

• Poor cash flow management

• Turnover in key management

• Lack of standard costing

Overtrading occurs when:

• A business sells below cost price

• Growth happens faster than the business can finance

• The business overestimates its expenses

• Sales volume decreases over time

During the diagnosis phase of a turnaround, management should:

• Immediately cut all costs

• Evaluate the level of failure and possibility of recovery

• Replace the management team

• Expand product offerings

Which of the following is not part of the six elements considered in an intervention decision?

• Market demand

• Concept offering

• Product packaging

• Financing required

The main focus of strategic analysis during a turnaround is to:

• Increase cash inflows

• Determine the core business and positioning

• Expand into new markets

• Reduce operational costs

A core symptom of a crisis-level distress situation is:

• Rising market share

• Confidence level drops among shareholders

• Increasing gross margin

• Improved cash flow