Friday Quantum Solutions (FQS) develops and sells quantum technology solutions for the measurement of underwater sea-life diversity. It has only one product and, last year, FQS sold 10,000 units. This year, FQS reported sales of 16,000 units but net profit was lower than expected. You have been asked to prepare a report on the company’s performance and financial position for the company’s owners. Prior to the meeting, you have received the following information for the past two years:

£000s This Year

£000s Last Year Revenues 2,400 2,000 Cost of goods sold 1,440 900 Gross profit 960 1,100 Other expenses 600 400 Net profit before interest and tax 360 700 Interest expense for the year 170 100 Tax payable 57 180 Net income 133 420 Equity 3410.25641 3230.76923 Ratios Current ratio 4 3.7 Quick ratio 1.50 2.20 Debtor payment period 46 44 Creditor payment period 51 81 Debt/assets 0.27 0.2 Times interest earned 2.1 7 Write a short report on FQS’s performance and financial position. Your report should identify possible causes for the changes in profitability, liquidity and financial position. You should also recommend a turnaround strategy to improve the company’s performance and financial position. It is generally accepted that the selling price per unit cannot be increased without a major loss of market share. In addition, reductions in the cost of materials and labour are not possible.