Declining RevenueSustained top-line decline materially reduces scale economies and long-term growth prospects. Over the medium term, falling revenue pressures margins, limits reinvestment and client retention efforts, and heightens execution risk for strategic initiatives.
Negative FCF GrowthDeclining free cash flow growth constrains the firm's ability to expand, reduce debt, or sustain dividends over several months. Even with good conversion rates, negative FCF growth signals weakening absolute cash generation, limiting strategic optionality.
Elevated Total DebtDespite improved leverage ratios, an elevated absolute debt burden increases vulnerability to revenue shocks and interest cost fluctuations. Over a 2-6 month horizon, high debt can limit capex, M&A capacity, and flexibility to navigate prolonged demand weakness.