Weak Overall Financial PerformanceSustained declines in revenue, deteriorating gross margins and persistent negative EBIT/EBITDA/net margins reflect chronic unprofitability. Over 2-6 months these structural profitability shortfalls erode reserves, limit reinvestment and raise the likelihood of capital raises or restructuring.
High And Worsening LeverageA worsening debt-to-equity profile with reduced equity and negative ROE constrains financial flexibility. In the medium term this increases refinancing and covenant risks, raises interest burden, and limits the firm’s ability to invest in growth or weather earnings volatility without dilutive financing.
Inconsistent, Negative Cash FlowPredominantly negative and volatile operating and free cash flows undermine liquidity and the ability to self-fund operations or capex. If cash generation does not normalize within months, the company will face greater reliance on external financing, raising solvency and execution risk.