Harnischfeger's corporate turnaround plan was a four-pronged approach that involved (1) changes in senior management, (2) cost reductions to lower the threshold profitability, (3) a reorientation of the company's activities and (4) debt restructuring and recapitalization. At first glance, these changes appear to have allowed Harnischfeger to improve its financial performance, going from a net loss of $3.49 per share in 1983 to a net gain of $1.28 per share in 1984. Additionally, Harnischfeger appears to have achieved the majority of his desired goals. results from each of his four changes, as shown below. • Harnischfeger's desired results from hiring a new chief operating officer and vice president of finance and administration were rebuild investors' and creditors' confidence in the company and show them that it is taking serious steps to improve its performance, starting with a new management team. The new interest of investors in the company, such as Mr. Peter Roberts, and bankers ready to extend credit to Harnischfeger again after failing to meet its requirements for working capital, quick liquidity ratio and of net worth, illustrated that Harnischfeger was capable of improving his image. • The desired results of cost reductions, such as reducing the workforce by almost half and eliminating executive bonuses, are to reduce the cost of goods and increase operating income. Although Harnischfeger's cost of sales (COS) increased between 1983 and 1984, the company appears to have reduced COS relative to sales from 81% to 79%. Additionally, its operating profit increased from $62 million in 1983 to $90 million in 1984. The desired results of the company's business reorientation were to reduce the risk of price increases, decrease costs and increase sales. These desired outcomes have middle of paper ......o renegotiating credit agreements with banks. However, the liquidity was the result of structural changes and would not have a significant effect on the business because it is unusual and infrequent (the extraordinary credits of $15 million also fall into this category). The financial report must be consistent from year to year. A business must carry out the same or similar activities, especially operating activities, to generate "money" each year and count the "money" as its profit. This is not the case for Harnischfeger, however. We doubt the company will perform well in the future. The company posted a modest profit this year because it reduced operating costs, not because it increased operating revenue. Since Harnischfeger did not generate earnings per operating activity, it would be too risky to predict whether its stock price will reach $6.00 per share during the fiscal year. 1986-87.