Rising LeverageIncreasing debt-to-equity reduces financial flexibility and raises interest and refinancing risk. If growth moderates or margins compress, higher leverage can constrain investment, increase cash interest burdens, and limit the company's ability to pursue strategic initiatives over the medium term.
Negative Free Cash FlowNegative free cash flow despite operating cash generation signals capital intensity or working capital strain. Persistently negative FCF forces reliance on external funding, elevates liquidity and refinancing risk, and can impede the company's ability to self-fund growth or pay down rising debt.
Declining ROE And Net Margin PressureFalling ROE and a declining net margin point to weakening capital efficiency and rising cost or tax pressures. Over several months this can erode investor returns, limit retained-earnings growth, and make it harder to justify reinvestment if returns on new capital remain below historical levels.