Weak Cash GenerationNegative free cash flow and poor cash conversion are structural red flags: they constrain investment, force reliance on financing, and reduce runway. Over months this limits product investment and heightens refinancing or liquidity risk despite low reported debt.
Low Net Profit & EBIT MarginsPersistently low profitability margins limit retained earnings and the firm's ability to self-fund growth. Even with good gross margins, weak EBIT/net margins reduce resilience to shocks, slow deleveraging, and impair long-term ability to reinvest for scale.
Declining Reported Revenue GrowthNegative revenue growth implies contracting scale or softer demand. Over a multi-month horizon, declining top line compresses operating leverage, strains margins and cash flow, and makes it harder to fund initiatives needed to regain growth and reach sustainable profitability.