Debt and equity

I have recently started learning about stocks. I was reading the financial statement of powergrid and found that the total current liabilities are more than the total current assets. So, does that mean the equity is in negative and the company is in net loss ?

A = L + E

If L > A it means E is negative

E = Shareholders Equity + Reserves and Surplus

If E is negative it means Reserves and Surplus is negative

Or company is making losses every year

So yes you are right

This is my understanding maybe some experts may correct

PowerGrid has more Debt.
But power companies are capital intensive. You can choose to compare the Debt with the peer companies. Also check the Market Cap of the peers before comparing.

Yes, you are absolutely true. The company is facing some loss right now. So, you should not invest in this company for long terms but you can still invest in it for short terms, in case the company is again on the way to success.Also check the Market Cap of the peers. I hope this helps.

Total Liabilities = Share Holders’ Funds + Minority Interest (in subsidiary companies) + Non-Current Liabilities (Long Term) + Current Liabilities

Total Assets = Non-Current Assets + Current Assets

Total Liabilities and Assets will always be equal on the balance sheet of the firm. The networth of the firm will be negative if [Minority Interest (in subsidiary companies) + Non-Current Liabilities (Long Term) + Current Liabilities] is more than Total Assets i.e. [Non-Current Assets + Current Assets].

Hope this helps.

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Your question is about current asset and current liability. As per definition, current liability means any item which becomes due within next 12 months. Current asset means any item which will be readily be converted into cash within next 12 months.

Due to poor cashflow or other factors, a company can have higher current liability than the current asset. This will lead to cash crunch for some time.

However you should look at the whole balance sheet and see if they got more of asset which are productive and generate revenue in future. In crux, current asset and liability equation is not complete to arrive at decision of company loss or valuation.