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Reserve and surplus

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(Querist)
20 January 2021 If the Reserves and surplus comes as negative figure what it means
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CA R SEETHARAMAN

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CA R SEETHARAMAN (Expert)
21 January 2021 It means loss incurred......
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CA Rashmi Gandhi

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CA Rashmi Gandhi (Expert)
22 January 2021 You are suffering from loss and your liabilities are more than your assets
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Aashok Kumar Sharma online

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Aashok Kumar Sharma online (Expert)
26 January 2021 Besides all this, if a firm decides to pay dividend far higher than the outstanding balance in its reserves and surplus account, it may lead to a negative or deficit networth.

If you are an equity investor, it is pertinent to keep a tab on your company’s networth. It will tell you if there are any assets left for you as a shareholder, should the company’s operations become unviable and warrant closure. If the company’s networth is negative or deficit and the entity makes losses, it may be a warning signal for you as an investor to exit your investment.
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