Cosan S.A. — financial distress indicators
Financial-health summary
Cosan S.A.'s reported numbers place it in the 'Weak' financial-health band (distress score 55/100). The main indicators are market-implied default probability >20%, thin interest coverage and very high leverage. Independently, the Ohlson accounting model puts its 1-year failure probability at 34% and the market-implied (Merton) default probability is 92.4%. In its favour: operating cash flow is positive over the latest 12 months.
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
Merton distance-to-default -1.43 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.
Interest coverage is only 1.37× (lenders typically require ≥ 2–3×).
Low coverage leaves little buffer against a profit dip before a debt-service or covenant breach.
Total debt is 14.6× EBITDA.
Debt above ~6× EBITDA is deep sub-investment-grade territory; refinancing becomes difficult when rates or earnings move against the company.
Share count up +113% in a year.
Survival financing: repeated equity raises at depressed prices.
Recurring net losses.
Repeated losses are a core input in both Ohlson and Altman failure models.
0 severe and 1 moderate distress-related headlines in the last 6 months.
Headlines are corroborating evidence only; they are weighted lightly and never drive a flag alone.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Operating cash flow is positive over the latest 12 months.
- Strong current ratio (1.87).
📰 Recent news scan
- restructurCosan SA (CSAN) (Q2 2026) Earnings Call Highlights: Strategic Deleveraging and Portfolio ...Yahoo Finance · 2026-08-19
- Cosan S.A. Announces Material FactYahoo Finance · 2026-08-18
- Cosan Q2 Earnings Call HighlightsYahoo Finance · 2026-08-17
- Cosan (BOVESPA:CSAN3) Stock Sees Modest Fair Value Cut As Analysts Flag Balance Sheet PressureYahoo Finance · 2026-08-13
- Is Cosan (CSAN) One of the Penny Stocks With Explosive Growth Potential?Yahoo Finance · 2026-06-20
- Is Cosan S.A. (CSAN) A Good Stock To Buy Now?Yahoo Finance · 2026-06-12
⚖️ U.S. legal pathway — Title 11, U.S. Code
Which chapter would apply?
- Chapter 11 — reorganisation. Management usually stays in control as debtor-in-possession; the automatic stay (§362) halts collection; a plan must meet the best-interests test (§1129(a)(7)) and the absolute priority rule (§1129(b)) — creditors are paid before shareholders, who are frequently wiped out.
- Chapter 7 — liquidation. A trustee sells assets and distributes proceeds by statutory priority (§§507, 726).
- Subchapter V (“Chapter 5”) is a fast track for small-business debtors under a statutory debt cap, but SEC-reporting companies are excluded (§101(51D)) — so it rarely applies to listed companies.
What typically triggers a filing
- Payment default or covenant breach lenders will not waive; a debt maturity that cannot be refinanced.
- Auditor going-concern doubt (ASC 205-40 / PCAOB AS 2415) — often itself a default trigger in loan agreements.
- Creditors can force a case with an involuntary petition (§303) if debts are not paid as they come due.
- Delisting after sustained sub-$1 prices or equity deficits cuts off equity funding.
Transactions shortly before filing can be clawed back (preferences — 90 days, §547; fraudulent transfers — 2 years, §548).
Frequently asked questions
What do Cosan S.A.'s financial-health indicators show?
As of 2026-10-08, Cosan S.A.'s public financial data places it in the 'Weak' band with a distress score of 55/100, driven by market-implied default probability >20%, thin interest coverage and very high leverage. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is Cosan S.A.'s financial distress score?
55/100 ('Weak'). Ohlson O-score -0.65 (model 1-year failure probability 34%). Merton distance-to-default -1.43 σ (model default probability 92.4%).
What works in Cosan S.A.'s favour?
Operating cash flow is positive over the latest 12 months. Strong current ratio (1.87).
How are shareholders treated if a company enters insolvency?
In a Chapter 11 reorganisation the absolute priority rule pays secured lenders, then unsecured creditors, before shareholders — so existing shares are usually cancelled or heavily diluted. In Chapter 7 the company is liquidated and shareholders rarely recover anything.
Other Energy, Oil & Gas companies with distress indicators
- Sky Quarry Inc. (SKYQ)Very weak 100/100
- SolarMax Technology, Inc. (SMXT)Very weak 100/100
- Spruce Power Holding Corporation (SPRU)Very weak 100/100
- Vivakor, Inc. (VIVK)Very weak 100/100
- SUNation Energy Inc. (SUNE)Very weak 86/100
- Canadian Solar Inc. (CSIQ)Very weak 74/100
Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.