a post in Yahoo finance board raised an interesting question. i happened to agree with it but want to make sure if that line of thinking is right we are talking about Kraft Foods KFT balance sheet. from 2007 balance sheet, Equity: 27 billion and change. Goodwill: 31 billion Intangibles" 12 billion. if you subract the Goodwill (a nice accounting way of saying the difference in fair value of aquisition price over the fair value of aquired company assets. in plain english thats just seems"overpaying" to me 
) anyways, thats not a real asset item in my eyes. so you subtract that it means the company “in essence” belongs to creditors. thats a crappy balance sheet !! why do people like companies like these ? what am i missing?
You are assuming that all the components of value are present on a company’s balance sheet and stated at fair value. This is not the case. A simple example could be the brand names that the company purchases. Accounting rules don’t allow intangibles like that to be put on balance sheet as discrete assets, but the market certainly values them as a contributor to cash flow. Hence the price paid for them. Of course you can only really know for sure whether you overpaid for them by estimating their impairment over time - Accounting rule do require this, inexact science as it is.
Well, I’m not sure that goodwill is so useless although it sometimes is. The value you “ought” to pay for something is decidedly not its book value. I’m too lazy to look it up, but what is the goodwill and intangibles? You should probably decide for yourself if those are valuable. If you acquired MSFT right now at the very depressed current market value you would record $150B or so worth of goodwill.