High Financial LeverageElevated leverage increases fixed interest obligations and reduces financial flexibility, limiting the firm's ability to fund capex or weather cyclical slowdowns. Over months, this raises refinancing and solvency risk, particularly if cash generation does not strengthen.
Persistent UnprofitabilityNegative ROE and recurring net losses constrain retained earnings and limit internal funding for growth. Sustained unprofitability pressures equity value, deters investment, and forces reliance on external capital which can dilute shareholders or increase debt.
Weak Cash Flow ConversionInability to convert income into cash undermines the company's capacity to service debt, invest in capacity or fund working capital from operations. Over a multi-month horizon this may necessitate costly financing, constrain growth initiatives, and elevate liquidity risk.