High LeverageA debt-to-equity ratio above 5 indicates heavy reliance on debt financing, which reduces financial flexibility and elevates refinancing and interest coverage risks. In a cyclical equipment market this capital structure increases vulnerability to downturns and limits strategic optionality.
Negative Profitability And Declining RevenueDeclining top-line and persistent negative net margins erode retained equity and constrain reinvestment in product support or new offerings. Over months this trend undermines competitive positioning, reduces capacity to fund aftermarket services, and complicates any turnaround efforts.
Negative Free Cash Flow GrowthNegative FCF growth limits the firm's ability to pay down debt, invest in maintenance capex, or expand service capabilities. Coupled with high leverage and losses, persistent negative free cash flow raises refinancing risk and increases the likelihood of dilutive or costly capital raises.