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Exam 13: Exit-Harvest-Turnaround

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Question 41

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Richard has invested $5 million in a roof installation company.Because of some bad strategic decisions made by the company owners, the company runs into losses.It files Chapter 11 bankruptcy.The company owners and Richard reach a resolution, and Richard agrees to accept $3 million in the hope that the firm will regain its glory in the future.This reduction in the amount of money that Richard accepts is known as a(n)

A) "look up."
B) "haircut."
C) "workout."
D) "slack."

E) A) and B)
F) C) and D)

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Question 42

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One way to determine the value of a publicly traded company is to divide the current earnings per share of stock into the price per share.This is called the ________ ratio.

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Question 43

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A small business founder needs to plan for the type of sale that will ________ their returns.

Attempting a turnaround is the best effort to reverse the decline of a business.

Which of the following valuation methods requires estimating the value of a business by using the industry price-earnings ratio?

List and describe the four chapters of bankruptcy.

A method of business valuation that takes the earnings of a business and multiplies that figure by the market premium of companies in its industry is called ________.

Which of the following valuation methods simply totals the value of all of the hard assets of an organization and adds in some value for goodwill?

In a declining business, an effective way to improve operations is to increase marketing to sell more products.

Which of the following valuation methods takes the earnings (or projected earnings) of a small business and multiplies that figure by the market premium of companies in the industry?

In bankruptcy proceedings, creditors who do not have collateral pledged behind their debt will be paid only if there are funds remaining after other creditors have been paid.

Briefly discuss the characteristics of Chapter 13 bankruptcy.

The true value of a business is the amount of money that a willing seller and buyer agree upon.

When a company starts to decline, the first step is to ________.

Which of the following statements is true of discounted future net cash flow?

What term is used to describe the efforts to reverse the decline of a business?

Most entrepreneurial businesses run lax operations where every individual has general functions and there is plenty of slack available for cross-training.

In a Chapter 13 bankruptcy filing, the time to approval is typically slower than other bankruptcy filings, and a creditor committee is required.

Strategic solutions in a failing company rely on exiting those poor strategic choices that have been made over the years.

A business that is declining due to operations problems struggles with