In my balance sheet I have a negative shareholders equity of minus $47.802.061. What does this mean and how can I make it positive again?
Anybody has any idea?
Is it your holding company or a subsidiary?
Its my subsidiary. It has always made a good profit and I have a weekly profit of around 45 mln, which is growing every week. I have no loans, and a total valueon the balance sheet of 950 mln, which is also increasing. But my negative shareholders equity is also rising and is already at minus 55 mln. I have no idea how I can influence this. And my holding company is making profit as well.
There is another subsidiary which is not making profit (loss of 0.5 mln a week) but there is no direct link between those subsidiaries.
Do you have an idea?
Well, shareholder equity is the amount of money given from the holding to the subsidiary on startup. If you sent money back from the subsidiary to the holding in some way, it might reduce the shareholder equity. That's the only thing I can think of.
I think its a bit more complicated and still cannot find the answer. I hope some financial expert or someone from AS can help me solve this problem. I have added an excel sheet with financial information of my airline.
If searched on the internet on the term "Negative shareholders equity". This is the result:
Causes of Negative Shareholder Equity
-
There are three fundamental causes of negative shareholder equity, though, often, two or even three of the causes will have played some role. The first is simply that in the long run, the company has made losses — this is particularly likely in the early years of the company. The second is that the company has run up a large amount in liabilities, such as by borrowing heavily. The final reason is that the company has paid out more in dividends than it has made in profits.
Consequences
-
Negative shareholder equity doesn't necessarily mean a company is in any financial difficulty. Negative shareholder equity is only a problem if it leads to cash-flow issues. It's possible, for example, that a company may have a large negative shareholder equity because it owes a lot of money on loans, but it may not be a problem because the company is making high profits and can confidently expect to pay back all of the loans on schedule. When examining such a company, it's important to distinguish between short-term and long-term assets and liabilities.
Accorinding to this text there are four causes:
The company has made losses: This cannot be the cause as my company always made profit.
Large amount of liabilities: There are no liabilities as far as I know.
Paid out more dividend that profit: Last period the dividend pay out was around $7.1mln. The profit last week was around $47mln.
A lot of loans: Since a couple of all loans are paid back, so there are no loans. Maximum loans I had was around $30 mln. But this is all paid back.
So I still don't know why I have a negative shareholders equity.
If someone can explain this to me it would be great.
And I am also wondering if I am the only airliner with a negative shareholders equity.
Thanks for your help!
As far as i know, shareholders equity is increased through owned aircraft.
Maybe it is possible to turn it negative by selling aircraft above/below the book value?
My negative shareholders equity already has risen to minus 82.132.615. And still don't know what is going on.
I only have around 30 mln of own airplanes in this company and hardly any shareholders in other companies.
But I still can't understand what is going on.