Astron Paper & Board Mill Limited — financial distress indicators

Interest coverage (EBIT / interest) is -0.83×.

When EBIT < interest, debt service is funded from cash reserves or new borrowing — the classic precursor to payment default and covenant breach.

Merton distance-to-default -3.37 σ → PD 100%.

Structural (Merton/KMV) model: equity is a call option on assets; low distance-to-default means assets are close to the default point.

Current ratio is 0.58 (current assets cover 58% of near-term obligations).

Cash-flow insolvency test: inability to pay debts as they fall due is the trigger for both U.S. involuntary petitions and Indian IBC default.

Net income negative in 3 of 3 fiscal years.

Persistent losses erode equity and the capacity to absorb shocks.

Revenue changed -97% year over year.

A >30% sales drop typically breaches leverage covenants and starves fixed-cost coverage.

Debt is 38% of assets while EBITDA is not positive.

With no operating earnings, repayment depends entirely on asset sales or fresh capital.

Price is -82% from its 52-week high.

Equity markets price distress early; collapses of this size usually reflect fear of wipe-out in a restructuring.

O-score 2.71 → model probability 94%.

Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.

Short-term debt is 522.1× cash on hand.

Maturity wall: debt due within a year must be refinanced, which is the most common proximate cause of filings.

Operating margin fell from -2% to -345% in two years.

Sharp margin compression signals loss of pricing power or cost control.

Revenue declined every year for three years.

Structural, not cyclical, decline.