Assets = Liabilities + Stockholders’ Equity

March 10th, 2009 by under Uncategorized. No Comments.

If I remember nothing from managerial and financial accounting classes from my MBA education, it is the above equation. Of course, I probably remember more than that from accounting. But I won’t go into detail; you, my faithful readers, won’t care, and I elect not to embarrass myself. 🙂

Very wrong, but I stole this from a blog:

Very wrong, but I stole this from a blog:

The point of this post is simple. (Side note: I do not approve of dogfighting or anything like it and find it morally horrifying).

I read online that Michael Vick has approximately $16 million in assets…and $20 million in liabilities. It’s interesting that when it comes to every day people who own one house, have one or two incomes, and perhaps two cars, I don’t judge them when their assets are less than their liabilities. After all, the moment you buy a car, its worth plummets below the price you paid or the dollar amount you owe for it. And in this housing market, most homes don’t have any equity…so your mortgage price is already greater than the market value for your house.

But strangely enough, I will judge Michael Vick as I like (let’s keep in mind there is a disclaimer on this blog that says what I post does not reflect others’ opinions, haha). How does one manage to garner $4 million in additional liabilities? By owning multiple homes, cars, and if I’m fair, probably taking care of a lot more people than just immediately family. A Vick-owned home is selling for $3.2 million on the auction block…and there are no takers. And it remains yet to be seen what will happen with his NFL contract with the Atlanta Hawks. A number of NFL teams have come out saying they would not employ him (hoping to spare themselves the wrath of PETA, evidently).

All I know is, I don’t have the right to judge. My liabilities far exceed my assets…unless you can calculate the market capitalization of an MBA. Let me know if you’ve got a good answer for that. 🙂