Negative EquityNegative shareholders' equity is a structural weakness that constrains capital-raising options and raises bankruptcy risk. It limits strategic flexibility, reduces creditor confidence, and can force dilutive financing or asset sales, undermining long-term stability unless equity is restored.
Negative ROE And LeverageNegative ROE shows the firm is not generating returns on its capital base, while negative debt-to-equity implies liabilities exceed equity, elevating financial risk. Together these impair the company's ability to fund growth internally and increase vulnerability to interest or credit stress.
Volatile Profitability & Cash FlowHistoric swings in profit and cash flows reduce predictability for planning and investment. Persistent volatility can impede consistent reinvestment, complicate debt service and forecasting, and raises the chance that recent improvements reverse, limiting durable operational confidence.