Canadian Solar Inc. — financial distress indicators
Financial-health summary
Canadian Solar Inc.'s reported numbers place it in the 'Very weak' financial-health band (distress score 74/100). The main indicators are operating profit does not cover interest, market-implied default probability >20% and very high leverage. Independently, the Ohlson accounting model puts its 1-year failure probability at 61% and the market-implied (Merton) default probability is 60.2%.
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.
Interest coverage (EBIT / interest) is 0.90×.
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 -0.26 σ → PD 60%.
Structural (Merton/KMV) model: equity is a call option on assets; low distance-to-default means assets are close to the default point.
Total debt is 50.8× EBITDA.
Debt above ~6× EBITDA is deep sub-investment-grade territory; refinancing becomes difficult when rates or earnings move against the company.
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 0.45 → model probability 61%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Cash covers ~13 months of free-cash-flow burn.
Funding needs within two years make the company dependent on capital-market access.
Price is -67% from its 52-week high.
For financial firms a share-price run often precedes a deposit or funding run (confidence channel).
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- No material mitigating factors found in the available data.
📰 Recent news scan
- Canadian Solar Unit to Supply 100 MW Battery Storage System in AustraliaYahoo Finance · 2026-10-06
- e‑STORAGE to Supply and Commission 100 MW/200 MWh Battery Storage System for OX2 in New South WalesYahoo Finance · 2026-10-06
- Recurrent Energy Achieves ISO 14001 Certification for Operations and Maintenance ServicesYahoo Finance · 2026-09-23
- Canadian Solar’s (CSIQ) Backlog Balloons While The Bottom Line BleedsYahoo Finance · 2026-09-01
- Canadian Solar (CSIQ) Q2 2026 Earnings Call TranscriptYahoo Finance · 2026-08-31
- Canadian Solar Inc. Q2 2026 Earnings Call SummaryYahoo Finance · 2026-08-28
⚖️ 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 Canadian Solar Inc.'s financial-health indicators show?
As of 2026-10-08, Canadian Solar Inc.'s public financial data places it in the 'Very weak' band with a distress score of 74/100, driven by operating profit does not cover interest, market-implied default probability >20% 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 Canadian Solar Inc.'s financial distress score?
74/100 ('Very weak'). Ohlson O-score 0.45 (model 1-year failure probability 61%). Merton distance-to-default -0.26 σ (model default probability 60.2%).
What works in Canadian Solar Inc.'s favour?
No material mitigating factors were found in the available data.
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
- SunPower Inc. (SPWR)Very weak 73/100
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.