Can Stockholders' Equity be Negative?

Total Stockholders' Equity is almost always a positive number, but it is possible for it to be negative. This typically occurs when the company incurs significant losses, which results in a large Accumulated Deficit. However, accumulated other comprehensive losses (past losses that bypassed the Income Statement) and treasury stock (shares the company repurchased) can also reduce Stockholders' Equity and contribute to it being negative.
When Total Stockholders' Equity is negative, it is referred to as Total Deficit. Negative equity typically precedes a bankruptcy (since the company is probably losing a lot of money) but it does not mean the shareholders owe the company money.-
Edspira is the creation of Michael McLaughlin, an award-winning professor who went from teenage homelessness to a PhD. Edspira’s mission is to make a high-quality business education freely available to the world.
-
SUBSCRIBE FOR A FREE 53-PAGE GUIDE TO THE FINANCIAL STATEMENTS, PLUS:
• A 23-PAGE GUIDE TO MANAGERIAL ACCOUNTING
• A 44-PAGE GUIDE TO U.S. TAXATION
• A 75-PAGE GUIDE TO FINANCIAL STATEMENT ANALYSIS
• MANY MORE FREE PDF GUIDES AND SPREADSHEETS
* eepurl.com/dIaa5z
-
SUPPORT EDSPIRA ON PATREON
* / prof_mclaughlin
-
GET CERTIFIED IN FINANCIAL STATEMENT ANALYSIS, IFRS 16, AND ASSET-LIABILITY MANAGEMENT
* edspira.thinki...
-
LISTEN TO THE SCHEME PODCAST
* Apple Podcasts: podcasts.apple...
* Spotify: open.spotify.c...
* Website: www.edspira.co...
-
GET TAX TIPS ON TIKTOK
* / prof_mclaughlin
-
ACCESS INDEX OF VIDEOS
* www.edspira.co...
-
CONNECT WITH EDSPIRA
* Facebook: / edspira
* Instagram: / edspiradotcom
* LinkedIn: / edspira
-
CONNECT WITH MICHAEL
* Twitter: / prof_mclaughlin
* LinkedIn: / prof-michael-mclaughlin
-
ABOUT EDSPIRA AND ITS CREATOR
* www.edspira.co...
* michaelmclaugh...

[@MyFinancialFocus]

Probably the weirdest part of financial statement analysis is negative stockholders equity

[@aryayudha6414]

So basically the retained earnings are negative (accumulated deficit) and it exceeds both common shares, preferred shares, and PIC (since those three can't be negative) resulting in total of negative equity.

[@JD-im4wu]

MO has negative equity and they continue to buy back their shares instead of paying off the debt.... Why?

[@tinnguyen2219]

Thank you so so so much for sharing this useful data! Greatly appreciated... AMAZING EXPLANATION BY THE WAY.....

[@nevarcruz4852]

so this is what happened to my CEI shares, i have a lot at a high price and now i have a few at a low price

[@TommyCarstensen]

McDonald's has negative equity.

[@MyFinancialFocus]

True. They borrow money to buy back shares to increase their stock price. If there’s a sharp increase in interest rates they could potentially be negatively impacted.

[@Erez.Levi.Stocks]

hello friend. first i wanna say thanks for the video it was very useful. second i have a question: i look on the balance sheet of "TUFN" company and something just not fit. In your free time, could you possibly explain to me why assets, liabilities and equity just don't work out or I just didn't understand? thanks a lot

[@copperntod17]

Yay! New video! :D Thank you for doing this for your viewers. You should start your own Becker lol! You're great!

[@Edspira]

I'm glad you like this content! Here is a corresponding article in the event that you want to read more on this topic: www.edspira.com/negative-stockholders-equity/

[@MoneyMan28]

Great Video