Morgan Stanley (MS) 10-Q 2009 Q2 Quarterly report

Exhibit 12

Morgan Stanley

Ratio of Earnings to Fixed Charges

and Ratio of Earnings to Fixed Charges and Preferred Stock Dividends

(dollars in millions)

	Three Months Ended					Six Months Ended					Fiscal Year
	June 30, 2009			June 30, 2008		June 30, 2009			June 30, 2008		2008		2007(1)		2006(1)		2005(1)		2004(1)
Ratio of Earnings to Fixed Charges
Earnings:
(Loss) income from continuing operations before income taxes(2)	$	(503	)	$	870	$	(1,398	)	$	2,854	$	2,216	$	3,354	$	9,049	$	6,005	$	5,189
Add: Fixed charges, net		1,941			9,120		4,367			20,962		37,752		57,519		41,069		23,757		14,133
Income (loss) from continuing operations before income taxes and fixed charges, net	$	1,438		$	9,990	$	2,969		$	23,816	$	39,968	$	60,873	$	50,118	$	29,762	$	19,322
Fixed Charges:
Total interest expense	$	1,881		$	9,063	$	4,252		$	20,852	$	37,523	$	57,302	$	40,897	$	23,552	$	13,977
Interest factor in rents		60			56		115			110		228		217		172		205		156
Dividends on preferred securities subject to mandatory redemption		—			—		—			—		—		—		—		—		45
Total fixed charges	$	1,941		$	9,119	$	4,367		$	20,962	$	37,751	$	57,519	$	41,069	$	23,757	$	14,178
Ratio of earnings to fixed charges		*			1.1		*			1.1		1.1		1.1		1.2		1.3		1.4
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends
Earnings:
(Loss) income from continuing operations before income taxes(2)	$	(503	)	$	870	$	(1,398	)	$	2,854	$	2,216	$	3,354	$	9,049	$	6,005	$	5,189
Add: Fixed charges, net		1,941			9,120		4,367			20,962		37,752		57,519		41,069		23,757		14,133
Income (loss) from continuing operations before income taxes and fixed charges, net	$	1,438		$	9,990	$	2,969		$	23,816	$	39,968	$	60,873	$	50,118	$	29,762	$	19,322
Fixed Charges:
Total interest expense	$	1,881		$	9,063	$	4,252		$	20,852	$	37,523	$	57,302	$	40,897	$	23,552	$	13,977
Interest factor in rents		60			56		115			110		228		217		172		205		156
Dividends on preferred securities subject to mandatory redemption		—			—		—			—		—		—		—		—		45
Preferred stock dividends		665			14		2,081			34		138		90		27		—		—
Total fixed charges and preferred stock dividends	$	2,606		$	9,133	$	6,448		$	20,996	$	37,889	$	57,609	$	41,096	$	23,757	$	14,178
Ratio of earnings to fixed charges and preferred stock dividends		*			1.1		*			1.1		1.1		1.1		1.2		1.3		1.4

(1) Certain prior-period information has been reclassified to conform to the current year’s presentation.

(2) (Loss) income from continuing operations before income taxes does not include dividends on preferred securities subject to mandatory redemption, gain/(loss) on discontinued operations and cumulative effect of accounting change (net).

“Fixed charges” consist of interest cost, including interest on deposit, dividends on preferred securities subject to mandatory redemption, and that portion of rent expense estimated to be representative of the interest factor.

The preferred stock dividend amounts represent pre-tax earnings required to cover dividends on preferred stock.

* The earnings for the three and six month periods ended June 30, 2009 were inadequate to cover total fixed charges and total fixed charges and preferred stock dividends.

The coverage deficiencies for total fixed charges for the three and six month periods ended June 30, 2009 were $503 million and $1,398 million, respectively.

The coverage deficiencies for total fixed charges and preferred stock dividends for the three and six month periods ended June 30, 2009 were $1,168 million and $3,479 million, respectively.