Negative Returns On EquitySustained negative ROE indicates the company is not converting shareholder capital into profitable returns, undermining long-term value creation. Persistent negative ROE typically requires strategic resets, asset disposals, or fresh capital, each of which can be time-consuming and dilutive to shareholders.
Weak Cash GenerationNegative operating and free cash flows constrain the firm's ability to fund working capital, invest in growth, pay creditors, or sustain dividends. Over months, poor cash generation increases reliance on external financing or asset sales, limiting strategic optionality and raising refinancing risk.
Declining Revenue And Margin ErosionA multi-year pattern of falling revenues and compressing gross and EBIT margins signals structural issues in pricing, cost control, or product mix. This trend weakens competitive positioning and reduces internal funds for reinvestment, making recovery harder without meaningful operational fixes.