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What could be the cause of a negative debt to equity ratio? Examining Dunkin Brands show...

What could be the cause of a negative debt to equity ratio? Examining Dunkin Brands show a -15.48 in 2015 and -20.77 in 2016. . I need supporting citations as well

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Answer #1

Negative debt to equity ratio means company's net-worth is negative.

It is caused due to excess of liabilities over assets, that could be due to larger long term debts than assets which shows company owes huge amount of money to debt holders.

Dunkin Brands data as available on NASDAQ is having negative equity for 2016 and 2017. Liabilities are greater than assets. In 2017 liabilities were 3313 $ million and assets were 3139$ million, so the equity value was -174$ million. Debt to equity ratio was -14.92.

Which shows the investment in this company is quite risky.

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