Persistent Net LossesOngoing net losses signal fundamental profitability problems that erode equity and constrain reinvestment. Persistent negative EBIT/EBITDA margins mean the business is not yet generating operating profits to fund growth or absorb shocks, requiring structural changes to operations or business mix.
Negative Operating Cash FlowNegative operating and free cash flows indicate the company cannot self-fund core operations and is reliant on external financing. This structural cash shortfall raises liquidity risk, limits strategic flexibility, and makes long-term sustainability dependent on continued access to capital or a prompt turnaround in cash generation.
Weakened Equity PositionDeclining shareholders' equity reflects accumulated losses and increases solvency risk. A weakened capital base reduces the firm’s ability to absorb future losses, restricts borrowing capacity, and can force dilutive financing or asset sales, hampering long-term strategic options and resilience.