Margin ErosionMaterial decline in gross and operating margins signals structural cost or pricing pressure across businesses. Persistent margin compression undermines profitability and makes long-term recovery harder, requiring sustained cost discipline or higher-margin product growth to restore returns.
Negative Free Cash FlowNegative free cash flow and deteriorating FCF trends constrain the company’s ability to invest, deleverage, or return capital. If sustained, weak FCF limits strategic options, increases reliance on external financing, and heightens liquidity risk over the medium term.
Negative Return On Equity And LossesA negative ROE indicates the business is not generating returns on shareholder capital, signaling value erosion. Persistent losses reduce equity buffer, increase sensitivity to shocks, and impair the company’s ability to attract capital or fund growth without diluting shareholders.