Weaker Free Cash Flow MomentumA decline in FCF growth compresses the buffer for capex, dividends, or debt reduction. Even if current FCF converts near net income, negative momentum signals potential volatility in working capital or collections that could strain cash availability over the coming months.
Absolute Debt Still MaterialAlthough leverage ratios improved, non-trivial absolute debt leaves exposure to interest cost changes and refinancing needs. In a consulting firm, debt can limit strategic flexibility for acquisitions or hiring ramps, creating a medium-term constraint on growth initiatives.
Margin Normalization RiskEasing margins suggest rising cost pressures or mix shifts that could persist. For a high-margin services firm, continued margin compression would reduce cash flow and ROE, limiting reinvestment and weakening long-term profitability if the trend continues.