High LeverageElevated leverage reduces financial flexibility and raises refinancing and interest-rate risk. Over 2–6 months, high debt can constrain capital allocation, force prioritization of servicing liabilities over growth projects, and amplify vulnerability to demand or margin shocks.
Weak Cash GenerationNegative operating cash flow and free cash flow signal structural cash-generation shortfalls. Persistent negative FCF limits the firm's ability to fund operations, capex, and dividends internally, likely necessitating external financing or asset adjustments that impair long-term strategic options.
Poor Profitability MetricsNegative operating results and eroding gross margins indicate cost and pricing pressures that impair sustainable profitability. Without durable margin recovery, the company risks continued equity erosion and reduced capacity to invest in product development or competitive differentiation.