High LeverageA debt-to-equity ratio above 4 and a falling equity ratio indicate significant financial leverage. High debt levels constrain investment flexibility, raise refinancing and interest risk, and leave limited buffer against commodity or operational shocks, threatening medium-term stability.
Persistent LossesRepeated net losses and negative returns on equity erode shareholder capital and limit retained earnings for reinvestment. Sustained unprofitability undermines long-term viability, makes deleveraging harder, and hampers the company's ability to fund growth without external capital.
Revenue Decline & Margin PressureA decline in revenue alongside low gross margins signals weak pricing power or high production costs. These structural revenue and margin pressures reduce sustainable cash generation and require either cost improvements, scale or product mix shifts to restore profitable operations.