GREY:GLKIF - Post by User
Comment by
alphatradeson Jun 20, 2018 1:42pm
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Post# 28200069
RE:RE:Negative equity
RE:RE:Negative equityBeing myself a CPA, I think I can answer that question.
A negative equity isn't particularly a bad thing for the future (since it is also a representation of a deferred tax asset, that they can use against future positive net income), it is more like a measure of the total deficit the company has accumulated over the years and doesn't reflect any future obligation the company has. It is more like an indication of poor historical results.
Regarding the comment on convertible debt, this is inaccurate. While it is true that convertible debt can be considered like equity for accounting reasons, the convertible debt would show as a positive amount, not negative. The retained earnings account is the only one that can show a negative balance in the balance sheet on a net basis.
I hope that covers your concerns.