Question:

Is it possible to have negative Shareholder's Equity? If so, how?

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Answer:

Yes it is possible.

The most common scenarios that would lead to negative Shareholder's Equity:

If a company has been losing money over the years, they have a declining Retained Earnings balance which can sometimes turn Shareholder's Equity negative.
LBOs with dividend recapitalizations. The PE firm may have taken out a large portion of its equity in cash which can sometimes turn Shareholder's Equity negative.

Other

Accounting

What does it mean if a company has negative Working Capital?

What is the difference between goodwill and intangible assets?

What is the difference between deferred revenue and accounts receivable?

What is goodwill?

What is the relationship between CapEx and Depreciation?

What happens to the three financial statements if we use PIK interest?

How does $10 of Depreciation affect the three financial statements?

Does Goodwill get amortized?

How do you calculate Free Cash Flow?

What is Operating Margin?

What are some of the major line items on the Balance Sheet?

If depreciation is a non-cash expense, why does it affect the cash balance on the Cash Flow Statement?

How do the 3 financial statements tie together?

What is working capital?

Why isn't the Income Statement affected by changes in Inventory?

What are some ways that companies can manipulate their earnings?

What is gross margin?

How is goodwill calculated?

What flows into Retained Earnings?

What are some of the major line items on the Income Statement?

What is Goodwill Impairment?

What's the difference between capital leases and operating leases?

How do you calculate LTM (last twelve months) financials?

What is gross profit?

How does Inventory increasing by $10 affect the three financial statements?

What are deferred tax assets and liabilities?

A company makes a $100 cash purchase of equipment on Dec. 31. How does this impact the three statements this year and next year?

Walk me through how $10 of Depreciation affects the three financial statements

What is amortization?

How does a company decide when to capitalize or expense a purchase?

What are some examples of non-recurring charges that would be added back to a company's EBITDA?

Walk me through the three financial statements

Where can you find Depreciation on the Income Statement?

What are some of the major line items on the Cash Flow Statement?