High LeverageA very high debt-to-equity ratio constrains financial flexibility and raises refinancing and interest-rate risks. Over several months this leverage can limit the company's ability to invest, respond to demand swings, or absorb shocks, increasing the risk of covenants or distress if cash flow deteriorates.
Negative ProfitabilityPersistent negative net profit and EBIT margins indicate the core business is not yet generating sustainable profits. Without structural margin improvement, continued losses erode equity and force reliance on financing or asset sales, undermining long-term viability and reinvestment capacity.
Weak Operating Cash ConversionNegative operating cash flow shows operations are not generating sufficient cash, meaning the company must rely on financing to run the business. Over a 2-6 month horizon, poor cash conversion increases liquidity risk and limits the firm’s ability to deleverage, invest, or absorb revenue volatility.