Declining Revenue TrendA >30% revenue decline is a structural red flag: shrinking top-line reduces economies of scale, erodes bargaining power with suppliers and customers, and compresses margins. If sustained over the next several quarters it limits ability to leverage fixed-cost cash generation and increases reliance on balance-sheet liquidity.
High LeverageElevated leverage amplifies earnings volatility and raises refinancing and covenant risk when profits are weak. With negative net margins and falling revenue, high indebtedness will constrain capital allocation, force higher interest burdens, and reduce strategic options over a multi-month window unless cash flows sustainably improve.
Negative Net & EBIT MarginsNegative EBIT and net margins indicate structural cost or pricing issues beyond non-cash adjustments. Persistent operating losses erode equity, limit reinvestment capacity and make longer-term recovery dependent on either revenue restoration or meaningful cost restructuring—both multi-month undertakings with execution risk.