Can someone please explain to me what it means if stockholders equity is less than total liabilities? Is it a good or bad thing?

It's not necessarily a "bad" thing - it just means the company could be taking advantage of leverage. Up to a point, higher amounts of leverage increase Return on Equity, "ROE".

Using DuPont analysis....

Since ROE = Return on Assets ("ROA") x Assets / Equity

(Assets / Equity is also known as the "equity multiplier")

an increase in debt can increase ROE, all else equal

Example: Assume a company's ROA is 10%...and

Assets: 100

Liabilities: 60

Equity: 40

A / E = 100 / 40 = 2.5

ROE = 10% x 2.5 = 25%

By comparison, assume the above company's competitor had higher levels of debt, but the same 10% ROA...

Assets: 100

Liabilities: 80

Equity: 20

Assets / Equity = 100 / 20 = 5

ROE = 10% x 5 = 50%

Also keep in mind that debt is usually a less expensive cost of capital than equity, generally due to the deductibility of interest expense, and the fact that creditors have a claim on a company's assets that is superior to that of equity holders. Of course, there comes a point where too much debt is simply unsustainable. But, as demonstrated above, increased leverage (e.g. increased debt) can improve ROE.

bad