Significant Negative Free Cash FlowLarge negative free cash flow signals the business is consuming cash despite accounting profits, constraining the company’s ability to self-fund capex, dividends, or strategic M&A. Over 2–6 months this increases reliance on financing and raises medium‑term liquidity risk.
Weak Cash Conversion From EarningsEarnings are not translating into operating cash, suggesting working-capital strain, timing mismatches, or one-time accounting gains. Persistent poor cash conversion undermines earnings quality and can force operational adjustments or external financing to sustain growth.
Drop In Cash And Short-term InvestmentsA meaningful decline in liquid reserves reduces the firm’s buffer against shocks despite low debt. This tightens short-term flexibility for inventory funding, store rollout, or unforeseen costs, and may necessitate precautionary measures that could slow strategic initiatives.