High LeverageHigh leverage makes the business sensitive to funding costs and adverse credit conditions, reducing strategic flexibility. Over months ahead, elevated debt levels can constrain growth investments, increase refinancing risk, and amplify earnings volatility in a credit-sensitive business.
Negative ProfitabilityPersistent negative margins indicate structural operational challenges or elevated credit costs. Until profitability turns positive, the company will struggle to retain earnings, rebuild equity, and generate returns on capital, limiting long-term investor appeal and reinvestment capacity.
Operating Cash Flow VolatilityVolatile operating cash flows undermine predictability of loan funding and provisioning, increasing reliance on external liquidity in stress periods. For a credit services firm, inconsistent cash conversion can hamper origination, elevate funding costs, and heighten operational and credit risk.