FST Corp. — financial distress indicators
Financial-health summary
FST Corp.'s reported numbers place it in the 'Very weak' financial-health band (distress score 88/100). The main indicators are operating profit does not cover interest, very high leverage and operations consume cash. Independently, the Ohlson accounting model puts its 1-year failure probability at 95% and the market-implied (Merton) default probability is 5.4%. In its favour: revenue still growing (+27% yoy).
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 -6.71×.
When EBIT < interest, debt service is funded from cash reserves or new borrowing — the classic precursor to payment default and covenant breach.
Total debt is 19.8× 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 2.92 → model probability 95%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Current ratio is 0.94.
Short-term obligations exceed short-term resources — the company relies on rolling over credit.
Cash covers ~17 months of free-cash-flow burn.
Funding needs within two years make the company dependent on capital-market access.
Recurring net losses.
Repeated losses are a core input in both Ohlson and Altman failure models.
Merton distance-to-default 1.60 σ → PD 5.4%.
Investment-grade issuers typically have 1-year PD well below 1%.
Short-term debt is 3.3× 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 21% to -10% 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
- Revenue still growing (+27% YoY).
- High insider/promoter ownership (39%) aligns management with survival.
📰 Recent news scan
- FST Corp. (KBSX) Grinds Higher: Shares Tick Up 1.19% to $1.70 as Traders Watch $1.78 Ceiling - Beta Neutral Pair - https://www.dars.gov.et/Google News · 2026-10-06
- FST Corp. (KBSX) Slides 15.70% as Shares Test $1.38 Support - Liquidity Order Flow - https://www.siam.in/Google News · 2026-10-05
- FST's new steel golf shafts tested up to about 20% stronger for their weight than many existing models. - Stock TitanGoogle News · 2026-09-24
- FST Corp. to Present at the 28th Annual H.C. Wainwright Global Investment Conference - Yahoo FinanceGoogle News · 2026-09-10
- FST Corp. ($KBSX) Stock Rises on Q2 2026 Earnings - Quiver QuantitativeGoogle News · 2026-07-28
- FST Corp opens a $10.4M stock-sale program to fund growth - Stock TitanGoogle News · 2026-07-02
⚖️ 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 FST Corp.'s financial-health indicators show?
As of 2026-10-08, FST Corp.'s public financial data places it in the 'Very weak' band with a distress score of 88/100, driven by operating profit does not cover interest, very high leverage and operations consume cash. 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 FST Corp.'s financial distress score?
88/100 ('Very weak'). Ohlson O-score 2.92 (model 1-year failure probability 95%). Merton distance-to-default 1.6 σ (model default probability 5.4%).
What works in FST Corp.'s favour?
Revenue still growing (+27% YoY). High insider/promoter ownership (39%) aligns management with survival.
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 Consumer Discretionary companies with distress indicators
- AIIO (AIIO)Very weak 100/100
- ECARX Holdings Inc. (ECX)Very weak 100/100
- Polestar Automotive Holding UK PLC (PSNY)Very weak 100/100
- Polestar Automotive Holding UK PLC (PSNYW)Very weak 100/100
- Reborn Coffee, Inc. (REBN)Very weak 100/100
- Sports Entertainment Gaming Global Corporation (SEGG)Very weak 100/100
All Consumer Discretionary companies with distress indicators →
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.