Negative Free Cash FlowSignificant negative free cash flow signals the company is consuming cash faster than it generates, forcing reliance on external financing or equity to sustain operations. Over months this constrains strategic flexibility, raises liquidity risk, and can limit investment in growth or product development.
Weak ProfitabilityPersistent negative net income and EBIT margins demonstrate an inability to convert revenue into sustainable profits. If losses continue, they will erode retained earnings, weaken the balance sheet, and require cost restructuring or strategic shifts to restore long-term profitability.
Declining Shareholders' EquityA downward trend in shareholders' equity indicates cumulative losses or capital outflows that reduce the firm's financial buffer. This weakens solvency metrics, narrows borrowing capacity, and heightens vulnerability if operating cash flows do not stabilize in the medium term.