High Financial LeverageA debt-to-equity ratio above 4 and a low equity ratio indicate heavy reliance on liabilities to finance assets. Structurally this raises refinancing and solvency risk, constrains strategic flexibility, and makes the company sensitive to interest and earnings shocks over the medium term.
Thin Operating ProfitabilityLow net and EBIT margins limit the company's capacity to absorb cost inflation, invest in growth, or accelerate deleveraging. Persistently thin margins reduce free cash flow upside from revenue growth and magnify the impact of any revenue declines on credit metrics and long-term viability.
Earnings Volatility / EPS DeclineA steep negative EPS growth rate signals volatile profitability and potential one-off pressures or operational deterioration. Over 2–6 months this undermines confidence in earnings stability, complicates long-term planning, and raises the risk that cash improvements prove transient.