RI model

Is RI model used for a firm with -ve earnings?

yes, you could use it for a firm with negative earnings or free cash flows. you want transparent financial reporting and high quality earnings- RI is all about keeping the clean surplus clean.

Just remember that the RI model starts with book value and then adjusts this by the PV of residual income. It therefor has a lot of its value coming from the firm’s book value. It can be used with negative earnings (even negative RESIDUAL earnings). It’s also not as sensitive to terminal value estimates. But you gotta have that clean surplus accounting thingy going on - nothing goes to retained earnings without first moving through the income statement.