Can Enterprise Value be lower than Equity Value? Can it be negative?

How to answer

Yes to both. Since you subtract cash, EV falls below equity value whenever net debt is negative (cash > total debt) — common for cash-rich, low-debt tech names. EV can even go negative if cash exceeds market cap plus debt. That's not distress — distressed firms carry high debt and little cash, which pushes EV UP. Negative EV is the opposite: a cash-dominant balance sheet, e.g. a beaten-down stock trading below net cash.

Key idea: Saying negative EV signals distress — it's the reverse. It signals excess cash, not a debt problem.