Negative Operating Cash FlowOperating cash flow turning negative and negative free cash flow signal cash-generation problems. Persistent cash shortfalls limit capacity to fund working capital, invest in service delivery, or absorb billing/payment delays, increasing reliance on external funding and raising liquidity risk.
Declining Profitability And MarginsA decline in revenue alongside negative net income and shrinking gross margins indicates structural pressures—pricing, cost inflation, or unfavorable contract mix. Sustained margin erosion weakens internal funding for growth and undermines long-term return on invested capital unless operational fixes are implemented.
Shrinking Assets And EquityA falling asset and equity base reduces scale and financial resilience. Contraction may reflect write-downs or divestments, which constrain borrowing capacity and the ability to support larger contracts or absorb operational setbacks, increasing strategic and counterparty risk.