Turnaround

What does 'Turnaround' mean

Turnaround is the financial recovery of a company that has been performing poorly for an extended time. In order to effect a turnaround, a company must acknowledge and identify its problems, consider changes in management and develop and implement a problem-solving strategy. In some cases, the best strategy may be to cut losses by liquidating the company rather than trying to turn it around.

BREAKING DOWN 'Turnaround'

Possible characteristics of a troubled company in need of a turnaround include revenues that do not cover costs, an inability to pay creditors, layoffs, salary cuts for officers and a significant decline in stock price. Poor management and/or social, technological and competitive changes may have caused the products or services the company sells to be perceived as subpar by consumers. A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company.

RELATED TERMS
  1. Prepackaged Bankruptcy

    A plan for financial reorganization that a company prepares in ...
  2. Standard & Poor's - S&P

    The world's leading index provider and the foremost source of ...
  3. Trading Below Cash

    When a company's total share value is less than its cash minus ...
  4. Forced Retirement

    The involuntary ending of one's career because of a layoff, health ...
  5. Zero Layoff Policy

    A type of company policy that dictates that no employees would ...
  6. Survivorship Bias

    The tendency for mutual funds with poor performance to be dropped ...
Related Articles
  1. Stock Analysis

    What to Look for in Turnaround Stocks

    The year's off to a volatile start, creating an opportunity for investors to get some bargains. But they have to be careful not to end up with a dud.
  2. Stock Analysis

    Get This Stock For Less Than Einhorn Paid -- And 50% Upside

    Investing in turnaround stocks can be quite challenging. It takes a keen eye to ignore the current bad news and visualize how things will look a year or two from now. The upside: If you can spot ...
  3. Stock Analysis

    Pay Less For This Stock Than One Of Wall Street's Greatest Investors

    Investing in turnaround stocks can be quite challenging. It takes a keen eye to ignore the current bad news and visualize how things will look a year or two from now. The upside: If you can spot ...
  4. Stock Analysis

    2 Outrageous Turnaround Stories

    This year will have more than its fair share of amazing rebounds, says Hilary Kramer, but these two stocks are among her favorite plays for a turnaround strategy right now. We’re talking ...
  5. Stock Analysis

    AllianceBernstein Could Be Looking At A Long Turnaround

    Poor fund performance has led clients to pull assets from AllianceBernstein and the fact that unit holders have minimal say in the company may turn off investors.
  6. Investing Basics

    Why Do Companies Care About Their Stock Prices?

    Read on to learn more about the nature of stocks and the true meaning of ownership.
  7. Stock Analysis

    Analyzing a Company's Investor Relations

    Read about the ways that investors can use a company's investor relations to analyze the company more deeply than other types of research would allow.
  8. Investing

    Unloved $10 Stock Poised For A Big Comeback

    <p>One of the most interesting changes in the market over the past few years is the resurgence in investor interest for U.S.-led profits. Th...
  9. Options & Futures

    Stock-Picking Strategies: Qualitative Analysis

    Fundamental analysis has a very wide scope. Valuing a company involves not only crunching numbers and predicting cash flows but also looking at the general, more subjective qualities of a company. ...
  10. Stock Analysis

    J.C. Penney's 3-Part Turnaround Strategy (JCP)

    Following J.C. Penney's (NYSE: JCP) brush with death during the past decade, the 113-year-old company's future boils down to a three-part turnaround strategy overseen by president and CEO-designee ...
RELATED FAQS
  1. What are the different sources of business risk?

    Explore the various sources of business risk for companies and learn how critical risk management is to a company's financial ... Read Answer >>
  2. For a company, is it more important to lower costs or increase revenue?

    Examine the question of whether a company's desire for increased profitability is better served by focusing on cutting costs ... Read Answer >>
  3. What does a low working capital ratio show about a company's working capital management?

    Find out the significance of working capital management for a company and look at the working capital ratio analysts use ... Read Answer >>
  4. Why should I look at other aspects of the company, rather than just the bottom line?

    Understand the limitations of the bottom line figure on a company's income statement and why it is insufficient for evaluating ... Read Answer >>
  5. How should I analyze a company's financial statements?

    Discover how investors and analysts use a company’s financial statements to evaluate a company's financial health and investment ... Read Answer >>
  6. What is the purpose of liquidation?

    Read about the role of liquidation in corporate finance and why it encourages discipline and efficiency in a market economy. Read Answer >>
Hot Definitions
  1. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  2. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  3. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  4. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  5. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  6. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
Trading Center