Very High LeverageA debt-to-equity ratio above 4x signals heavy reliance on borrowing, increasing interest and refinancing risk. With elevated leverage, any downturn or cash-flow hiccup can quickly strain liquidity and limit strategic options like capex or M&A over the medium term.
Negative ProfitabilitySustained negative net and EBIT margins indicate operations are not yet profitable, limiting retained earnings and hampering the ability to deleverage. Without durable margin improvements, the company will remain dependent on external financing to fund growth and obligations.
Declining Gross MarginA falling gross margin points to cost pressures or pricing erosion that reduce the efficiency of revenue growth. If this trend persists, it will undermine the ability to convert revenue gains into sustainable profits and weaken competitive positioning over coming quarters.