Significant Debt Vs EquityElevated absolute debt relative to equity raises interest and refinancing risk, constraining capital allocation. Higher leverage reduces strategic flexibility, increases sensitivity to rate moves and could force deleveraging through asset sales or curtailed investment over the medium term.
Declining Profit MarginsCompressing gross and net margins signal cost or pricing pressures that erode operating profitability. Margin deterioration limits retained earnings for reinvestment, weakens returns on capital and makes the business more vulnerable to adverse demand or input-cost shocks long term.
Inconsistent Free Cash FlowIntermittent or negative free cash flow undermines the firm's ability to fund capex, reduce debt or sustain dividends without external funding. Persistent FCF weakness pressures liquidity, may raise financing costs and can force strategic trade-offs that impair long-term growth execution.