CTA Cheat Sheet 2026

The 30 highest-yield CTA facts, distilled from real exam questions. Print it, save it as a PDF, or study it here — free, no sign-up.

1. What approach focuses on minimizing defects in processes? → Six Sigma
2. When using precedent transaction analysis for a distressed company, analysts should: → Include distressed M&A transactions as comps since they reflect the current situation
3. Which business model change is most commonly recommended when a turnaround company has high fixed costs and declining revenue? → Convert fixed costs to variable costs by outsourcing non-core activities
4. The 'going-concern premium' in a distressed business valuation represents: → The value of the assembled business above its liquidation value
5. What happens if a preferential transfer is identified? → Court may reverse the transfer
6. Which law mandates fair treatment of employees during restructuring? → WARN Act
7. Which analytical technique is most useful for detecting fictitious or manipulated revenues in a distressed company? → Benford's Law analysis of the distribution of leading digits in financial data
8. When communicating with secured creditors during a turnaround, what is the primary goal of the turnaround professional? → Maintain transparency and build trust to secure cooperation
9. What is a key method for reducing operational costs? → Consolidate suppliers
10. In forensic accounting for a distressed company, what is 'channel stuffing'? → A fraudulent practice of inflating revenue by forcing excess inventory onto distributors
11. Which bankruptcy chapter focuses on corporate reorganization? → Chapter 11
12. When reviewing a distressed company's inventory during forensic analysis, what should the analyst be most alert to? → Overstated inventory values, obsolete items, and discrepancies with physical counts
13. Which activity would typically cause a cash inflow? → Selling goods or services
14. In turnaround negotiations, 'forbearance' refers to: → A lender's agreement to temporarily refrain from exercising default remedies
15. When applying a DCF to a distressed company, the discount rate should reflect: → A risk-adjusted rate that accounts for the elevated uncertainty and distress risk
16. Which stakeholder is most likely to be represented by a financial advisor rather than legal counsel during restructuring negotiations? → A large institutional bondholder seeking to maximize recovery value
17. What action defines a liquidation under bankruptcy law? → Asset sales to satisfy creditors
18. Which type of liability can directors face in turnaround situations? → Breach of fiduciary duty
19. Which principle is emphasized in Lean methodology? → Waste minimization
20. Which communication approach is most effective when informing employees about a turnaround restructuring plan? → Communicate early, honestly, and frequently to reduce uncertainty and retain key talent
21. What is the primary purpose of conducting due diligence in a turnaround situation? → To assess risks, verify financial information, and identify root causes of distress
22. What is an example of a non-cash expense? → Depreciation
23. The 'enterprise value to EBITDA' (EV/EBITDA) multiple is particularly challenging to apply to distressed companies because: → Distressed companies often have negative or highly distorted EBITDA
24. What does 'management due diligence' primarily assess in a turnaround situation? → The capabilities, integrity, and depth of the management team
25. An 'ad hoc' creditor committee differs from an official unsecured creditors' committee (UCC) in that: → It forms informally without court appointment and has no statutory authority
26. Why must turnaround managers follow antitrust laws? → To maintain fair market competition
27. Why is benchmarking important in cost reduction? → Identifies best practices for improvement
28. Which event can trigger involuntary bankruptcy? → Creditors' petition for unpaid debts
29. Which credit metric is most important for assessing near-term default risk in a distressed company? → Fixed charge coverage ratio
30. Which report tracks incoming and outgoing cash? → Cash flow statement