Unitech Limited — financial distress indicators

Total liabilities are 1.44× total assets.

Balance-sheet insolvency test: debts exceeding the fair value of assets is the statutory definition of net-worth erosion; under the Companies Act 2013 it is a recognised sign of financial sickness.

Interest coverage (EBIT / interest) is -0.00×.

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 -1.40 σ → PD 92%.

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 0.62 (current assets cover 62% 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.

Operating cash flow negative in 2 of the last 3 years.

A business that cannot fund itself from operations depends on external capital to survive.

O-score 4.55 → model probability 99%.

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

Short-term debt is 23.3× cash on hand.

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

1 severe and 0 moderate distress-related headlines in the last 6 months.

Headlines are corroborating evidence only; they are weighted lightly and never drive a flag alone.