Final answer:
A negative net worth occurs when you owe more than what you own. For a bankrupt bank, this means its liabilities exceed its assets. The balance sheet provides a detailed account of the bank's financial status.
Step-by-step explanation:
A negative net worth is when you owe more than you own. This concept is important in understanding financial health, whether for individuals or businesses like banks. A bank that is bankrupt will have a negative net worth, meaning that the bank's assets are worth less than its liabilities. This situation can arise when a bank has too many nonperforming loans that can't be repaid, has made poor investment decisions, or experiences a significant withdrawal of deposits, among other factors. The balance sheet of the bank can provide insights into how the assets and liabilities compare, signaling the bank's solvency or a potential downward trajectory towards bankruptcy.