Minimal / No RevenueA business with zero or negligible recurring revenue lacks the fundamental engine for sustainable profitability. Without a stable revenue base, margins, cash generation and return metrics cannot improve organically, forcing reliance on financing or asset sales to survive beyond a few quarters.
Persistent Negative Cash FlowConsistent negative operating and free cash flow denotes ongoing cash burn and dependence on external funding. Over a 2–6 month horizon this structural cash shortfall threatens runway, limits strategic investments, and increases dilution or creditor risk if new capital is required.
Negative Profitability / ROESustained negative net income and ROE indicate the company is eroding shareholder capital rather than creating it. Even with low leverage, prolonged capital destruction can deplete equity, reduce strategic options, and raise the risk of restructuring or impaired asset write-downs over the medium term.