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    Is negative equity possible? Will you go bankrupt?

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    A mutual business partner and I were discussing the the bailout situation with GM when she stated that it is impossible for a company to have a negative book value of equity without ending up in bankruptcy. Is this true?

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    Solution Preview

    Good news for you; bad news for your partner.

    Here is the 2008 Boeing Balance Sheet (pdf was too large to upload) and the 2009 Balance Sheet showing that the negative equity was not the downfall of the firm. No bankruptcy here. Here ...

    Solution Summary

    Inquiring minds want to know - and this sets the record straight. Financial statements for a real firm are presented as evidence are provided.