Negative Operating Cash FlowPersistent negative operating and free cash flow erodes liquidity and forces reliance on financing or asset sales to fund operations and follow-on investments. For an investment company, weak cash conversion limits the ability to capitalize on opportunities and raises solvency risk over time.
Negative Gross ProfitNegative gross profit signals that core revenue-generating activities are loss-making. This structural weakness implies the firm depends on non-operating gains for reported profits, making margins unsustainable and reducing predictability of future operating performance.
Volatile, Non-core EarningsEarnings driven by one-offs and mark-to-market gains undermine earnings quality and make metrics like ROE misleading. This volatility complicates capital allocation and forecasting, reducing confidence in durable profitability and increasing execution risk over months.