High Leverage And Weak EquityA highly leveraged balance sheet with minimal or negative equity reduces resilience to revenue shocks and increases refinancing risk. Over months, leverage constrains strategic flexibility, raises interest burdens, and can force dilutive financing if operating trends do not rapidly improve.
Persistent Negative Operating And Free Cash FlowOngoing negative OCF and free cash flow indicate the business cannot internally fund operations or growth. Medium-term reliance on external financing exposes the company to capital market cycles, potentially limiting investment in sales, inventory, or R&D and risking liquidity stress if funding tightens.
Consistent Unprofitability At EBIT And Net LevelsSustained negative EBIT and net losses reflect operational challenges and cost structure issues. Without a clear path to sustained profitability, the firm may struggle to generate retained earnings for reinvestment, undermining long-term competitiveness and increasing dependence on external capital.