High LeverageAn extremely high debt-to-equity ratio materially raises refinancing and interest risk, constrains capital allocation, and amplifies earnings volatility. Over 2–6 months, heavy leverage limits strategic flexibility and increases probability that growth must be funded by costly debt or equity dilution.
Negative ProfitabilityDeep negative margins reflect structural cost or pricing issues that hamper sustainable profitability. Persistent operating losses reduce retained earnings, weaken investor confidence, and make it harder to self-fund growth or service debt, elevating long-term solvency and viability risks.
Weak Operating Cash ConversionExtremely poor conversion of earnings into operating cash signals liquidity stress and potential dependence on external financing. This weak cash generation undermines the company's ability to fund operations, invest in growth, or reduce leverage, making the capital structure fragile over time.