Cash-Flow DeteriorationA large drop in operating cash flow and zero free cash flow materially reduces internal funding for portfolio purchases and capital needs. This weakens financial flexibility, increases reliance on external financing, and raises execution risk for growth plans in the medium term.
Rising LeverageMeaningfully higher leverage makes the firm more sensitive to rising funding costs or tighter credit markets. Elevated debt levels constrain balance sheet optionality, amplify refinancing risk, and can force more conservative portfolio acquisition strategies under stress.
Earnings VolatilityA track record of volatile earnings and recent margin compression signals that collection outcomes and portfolio returns can swing significantly. This reduces predictability of profits and cash flows, complicating capital planning and investor confidence over coming quarters.