SFL Corporation Ltd. — financial distress indicators
Financial-health summary
SFL Corporation Ltd.'s reported numbers place it in the 'Watch' financial-health band (distress score 46/100). The main indicators are severe working-capital shortfall, thin interest coverage and ohlson o-score signals likely failure. Independently, the Ohlson accounting model puts its 1-year failure probability at 79% and the market-implied (Merton) default probability is 0.0%. 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.
Current ratio is 0.32 (current assets cover 32% 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.
Interest coverage is only 1.02× (lenders typically require ≥ 2–3×).
Low coverage leaves little buffer against a profit dip before a debt-service or covenant breach.
O-score 1.30 → model probability 79%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Revenue changed -19% year over year.
Falling sales reduce cash available for debt service.
Short-term debt is 5.7× cash on hand.
Maturity wall: debt due within a year must be refinanced, which is the most common proximate cause of filings.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Operating cash flow is positive over the latest 12 months.
📰 Recent news scan
- SFL - Sale of four LR2 and three Suezmax tankers, and termination of chartersYahoo Finance · 2026-10-07
- SFL - Newbuild order for two Very Large Ammonia Carriers in combination with long term time chartersYahoo Finance · 2026-10-05
- SFL - Second Quarter 2026 Results (correction)Yahoo Finance · 2026-09-29
- SFL (SFL) Is Back In The Spotlight, What Is Behind The Attention?Yahoo Finance · 2026-09-24
- SFL (SFL) Locks In $750 Million Hapag-Lloyd Deal, Backlog Hits $4.6 BillionYahoo Finance · 2026-09-14
- SFL - Charter Extension for 6 x 15,400 TEU vessels adding $750 Million BacklogYahoo Finance · 2026-09-11
⚖️ 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 SFL Corporation Ltd.'s financial-health indicators show?
As of 2026-10-08, SFL Corporation Ltd.'s public financial data places it in the 'Watch' band with a distress score of 46/100, driven by severe working-capital shortfall, thin interest coverage and ohlson o-score signals likely failure. 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 SFL Corporation Ltd.'s financial distress score?
46/100 ('Watch'). Ohlson O-score 1.3 (model 1-year failure probability 79%). Merton distance-to-default 7.47 σ (model default probability 0.0%).
What works in SFL Corporation Ltd.'s favour?
Operating cash flow is positive over the latest 12 months.
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.
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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.