Earnings VolatilitySharp swings in net income driven by revaluations or below-the-line items undermine predictability of earnings and distributions. Persistent volatility complicates capital planning, reduces investor confidence in recurring returns, and increases sensitivity to accounting and market shocks.
Free Cash Flow DeclineA collapse of free cash flow to zero materially weakens the firm's ability to self-fund capex, service debt and support dividends. Over months, this forces reliance on external financing or asset disposals, reducing strategic optionality and increasing refinancing risk in stressed markets.
Eroding Asset BaseDeclining equity and asset bases point to valuation pressure or asset sales, which can shrink NAV and borrowing headroom. Structurally this raises sensitivity to future revaluations, limits growth capacity and can constrain dividend sustainability if trend persists.