Negative Free Cash FlowNegative free cash flow constrains financial flexibility, forcing reliance on external funding or asset sales to cover capex and dividends. Over a 2–6 month horizon, sustained negative FCF can pressure liquidity, limit reinvestment and necessitate management action to restore self-funded operations.
Declining Net ProfitabilityA sharp drop in net margin erodes retained earnings and reduces capacity to absorb shocks or invest for growth. Even with stable operating margins, falling net profitability points to higher interest, taxes or non-operating drains that weaken long-term earnings power and shareholder returns.
Rising Leverage And Falling ROERising leverage combined with a declining ROE raises financial risk and reduces capital efficiency. Higher indebtedness increases fixed obligations and interest sensitivity, while lower ROE suggests diminished ability to generate returns on equity, constraining strategic flexibility over the medium term.