Negative Equity / Weak Capital StructureNegative shareholders' equity signals a broken capital structure where liabilities exceed assets. This undermines borrowing capacity, raises covenant and insolvency risk, and typically forces dilution or asset sales to recapitalize, creating a durable financing constraint absent a recapitalization.
Negative Margins And Operational InefficiencyNegative gross and EBIT margins indicate core operations are unprofitable, pointing to structural cost or pricing issues. Without addressing these fundamentals—product mix, input costs, or pricing power—sustained profitability and scalable margins remain unlikely, impairing long-term viability.
Persistent Negative Free Cash FlowChronic negative free cash flow and operating outflows constrain the company's ability to fund operations, invest, or service debt. Persistent cash deficits raise refinancing and solvency risk, limiting strategic options and necessitating external financing or structural turnaround to restore stability.