Rising LeverageAn increasing debt/equity ratio reduces financial flexibility if revenue or margins weaken. Higher leverage raises interest and refinancing exposure, constrains free cash deployment for capex or acquisitions, and heightens downside risk during slower demand periods.
Volatile Cash ConversionInconsistent conversion of profit to cash, driven by working-capital swings, undermines predictability of funding for operations and investments. This volatility can force short-term financing needs, weaken investment planning, and reduce the reliability of reported earnings as a cash proxy.
Margin And Mix PressureDeclining recent gross margins and historical volatility signal structural pressure from cost increases or less favorable project/product mix. Sustained margin erosion would compress operating cash flow and returns, making it harder to finance growth or defend pricing long term.