Declining Cash ReservesFalling cash balances reduce the company’s buffer for seasonal working capital and strategic spending. Over several quarters this can force reliance on external financing, constrain promotional flexibility, or delay investments in product development and channel expansion.
Weak Cash GenerationPersistent negative free cash flow and weak operating cash conversion undermines internal funding of growth and dividends. Reliance on financing activities to cover deficits signals operational cash fragility that can limit long‑term reinvestment and increase funding costs.
Compressing Net Profit MarginA shrinking net margin despite healthy gross margins suggests rising SG&A, distribution or other operating costs. If structural, margin compression erodes retained earnings and free cash flow, constraining ability to fund brand-building or offset cyclical downturns over months ahead.