Persistent Losses And Declining RevenuePersistent losses and falling revenue weaken the firm's earnings power and erode retained capital. Over months this depletes reserves, constrains investment capacity, and forces difficult choices between cost cuts, asset sales, or dilutive financing—each harming long-term competitive position.
Consistently Negative Free Cash FlowSustained negative free cash flow and absent operating/investing cash flows indicate structural liquidity stress. This undermines the ability to self-fund operations or capex, raising reliance on external financing and increasing refinancing, interest, and dilution risks over the medium term.
Erosion In Equity And AssetsDeclining equity and asset bases weaken balance-sheet resilience and reduce collateral for lenders. Structurally, this limits financing options, increases borrowing costs or covenant risk, and may force asset disposals or equity issuance that impair the company's ability to execute long-term recovery strategies.