Endava plc — financial distress indicators
Financial-health summary
Endava plc's reported numbers place it in the 'Weak' financial-health band (distress score 51/100). 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 57% and the market-implied (Merton) default probability is 85.0%. 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.
Interest coverage (EBIT / interest) is -0.30×.
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 -1.04 σ → PD 85%.
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 2005.1× EBITDA.
Debt above ~6× EBITDA is deep sub-investment-grade territory; refinancing becomes difficult when rates or earnings move against the company.
Price is -80% from its 52-week high.
For financial firms a share-price run often precedes a deposit or funding run (confidence channel).
Operating margin fell from 14% to 4% in two years.
Sharp margin compression signals loss of pricing power or cost control.
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 (2.07).
📰 Recent news scan
- Endava Stock (DAVA) Rebounds to $1.93: Oct 2026 Analysis - AdmiralsGoogle News · 2026-10-09
- DAVA Shareholder Alert: Endava plc Securities Class Action Lawsuit - Investors With Losses May Contact SueWallSt - MorningstarGoogle News · 2026-10-08
- Endava Stock Price Forecast. Should You Buy DAVA? - StockInvest.usGoogle News · 2026-10-02
- Endava (NYSE:DAVA) Stock Forecast & Analyst Predictions - Simply Wall StreetGoogle News · 2026-09-22
- Endava plans 2026 results by Nov. 2 - Stock TitanGoogle News · 2026-09-21
- Endava (DAVA) Stock Sees Fair Value Cut After Guidance Cuts And Q3 Miss - Yahoo FinanceGoogle News · 2026-07-09
⚖️ 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 Endava plc's financial-health indicators show?
As of 2026-10-08, Endava plc's public financial data places it in the 'Weak' band with a distress score of 51/100, 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 Endava plc's financial distress score?
51/100 ('Weak'). Ohlson O-score 0.29 (model 1-year failure probability 57%). Merton distance-to-default -1.04 σ (model default probability 85.0%).
What works in Endava plc's favour?
Operating cash flow is positive over the latest 12 months. Strong current ratio (2.07).
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 IT & Software companies with distress indicators
- Cyabra, Inc. (CYAB)Very weak 100/100
- Exyn Technologies, Inc. (EXYN)Very weak 100/100
- The OLB Group, Inc. (OLB)Very weak 100/100
- Roadzen, Inc. (RDZN)Very weak 100/100
- Rekor Systems, Inc. (REKR)Very weak 100/100
- Veea Inc. (VEEA)Very weak 100/100
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.