Sharply Declining Revenues & LossesSustained revenue decline and ongoing net losses erode scale economics, weaken bargaining power with suppliers and customers, and limit ability to fund capex or innovation internally. Without revenue recovery, profitability and long-term viability remain at risk.
High Leverage & Eroding EquityA heavily leveraged balance sheet with shrinking equity raises solvency and refinancing risk, increases interest burden, and restricts strategic flexibility. Over 2-6 months this can constrain growth initiatives and force prioritization of creditor obligations over reinvestment.
Inconsistent Operating Cash FlowsIrregular conversion of income into operating cash reduces the firm's ability to self-fund working capital, capex, and debt service. This structural cash generation weakness increases reliance on external financing and heightens vulnerability to funding market disruptions.