How Declining Sales affects Company?

Fall in sales has ceased to become news with every passing month the dip getting deeper . How does the decline in sales affects the company's prospects . The table below has the answer .

       Details /year         2018            2019            % Change 
       
        Quantity sold        1000             900               -10
         
       Fixed costs@30%       60000            60000              0

          FC/pc              60               66.6              +11.1

         Variable cost/pc    120              120                 0

         Price /pc           200              200                 0

         Revenues            200000           180000            -10

          Profits            20000            12000             -40

From the above its clear that a decline of 10% in Sales with all other factors remaining same , triggers a reduction of 40% in profits , A steeper fall in sales or if the FC % is higher, leads to a bigger downfall in Profits .

Whats the way out ? Reduce FC/pc and VC/pc as much as possible, wherever possible to stop the rampaging effect of declining sales . Manpower costs is minimal ( 10-15%) and reducing that will only bring resentment and badwill . Instead it will be prudent if companies start their effort in reducing per unit FC and VC and conducting a Need Audit of all activities .

Good Luck to all in tiding over this crisis .