Exhibit 12
Morgan Stanley
Ratio of Earnings to Fixed Charges
and Ratio of Earnings to Fixed Charges and Preferred Stock Dividends
(dollars in millions)
| Nine Months Ended | One Month Ended | Fiscal Year | |||||||||||||||||||||
| September 30, 2009 | December 31, 2008 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||
Ratio of Earnings to Fixed Charges | |||||||||||||||||||||||
Earnings: | |||||||||||||||||||||||
(Loss) income before income taxes(1) | $ | (312 | ) | $ | (2,023 | ) | $ | 787 | $ | 3,275 | $ | 8,950 | $ | 5,923 | $ | 5,152 | |||||||
Add: Fixed charges, net | 5,864 | 1,038 | 37,704 | 57,514 | 41,021 | 23,688 | 14,114 | ||||||||||||||||
Income (loss) before income taxes and fixed charges, net | $ | 5,552 | $ | (985 | ) | $ | 38,491 | $ | 60,789 | $ | 49,971 | $ | 29,611 | $ | 19,266 | ||||||||
Fixed Charges: | |||||||||||||||||||||||
Total interest expense | $ | 5,668 | $ | 1,018 | $ | 37,480 | $ | 57,302 | $ | 40,913 | $ | 23,560 | $ | 13,980 | |||||||||
Interest factor in rents | 196 | 20 | 224 | 212 | 108 | 128 | 89 | ||||||||||||||||
Dividends on preferred securities subject to mandatory redemption | — | — | — | — | — | — | 45 | ||||||||||||||||
Total fixed charges | $ | 5,864 | $ | 1,038 | $ | 37,704 | $ | 57,514 | $ | 41,021 | $ | 23,688 | $ | 14,114 | |||||||||
Ratio of earnings to fixed charges | * | * | 1.0 | 1.1 | 1.2 | 1.3 | 1.4 | ||||||||||||||||
Ratio of Earnings to Fixed Charges andPreferred Stock Dividends | |||||||||||||||||||||||
Earnings: | |||||||||||||||||||||||
(Loss) income before income taxes(1) | $ | (312 | ) | $ | (2,023 | ) | $ | 787 | $ | 3,275 | $ | 8,950 | $ | 5,923 | $ | 5,152 | |||||||
Add: Fixed charges, net | 5,864 | 1,038 | 37,704 | 57,514 | 41,021 | 23,688 | 14,114 | ||||||||||||||||
Income (loss) before income taxes and fixed charges, net | $ | 5,552 | $ | (985 | ) | $ | 38,491 | $ | 60,789 | $ | 49,971 | $ | 29,611 | $ | 19,266 | ||||||||
Fixed Charges: | |||||||||||||||||||||||
Total interest expense | $ | 5,668 | $ | 1,018 | $ | 37,480 | $ | 57,302 | $ | 40,913 | $ | 23,560 | $ | 13,980 | |||||||||
Interest factor in rents | 196 | 20 | 224 | 212 | 108 | 128 | 89 | ||||||||||||||||
Dividends on preferred securities subject to mandatory redemption | — | — | — | — | — | — | 45 | ||||||||||||||||
Preferred stock dividends | 888 | 495 | 112 | 89 | 27 | — | — | ||||||||||||||||
Total fixed charges and preferred stock dividends | $ | 6,752 | $ | 1,533 | $ | 37,816 | $ | 57,603 | $ | 41,048 | $ | 23,688 | $ | 14,114 | |||||||||
Ratio of earnings to fixed charges and preferred stock dividends | * | * | 1.0 | 1.1 | 1.2 | 1.3 | 1.4 | ||||||||||||||||
| (1) | (Loss) income from continuing operations before income taxes does not include dividends on preferred securities subject to mandatory redemption, gain/(loss) on discontinued operations, cumulative effect of accounting change (net), non-controlling interests and income or loss from equity investees. |
Fixed charges consist of interest cost, including interest on deposits, interest on discontinued operations, dividends on preferred securities subject to mandatory redemption, and that portion of rent expense to be representative of the interest factor.
Fixed charges do not include interest expense on uncertain tax liabilities as the Company records these amounts within the Provision for income taxes.
The preferred stock dividend amounts represent pre-tax earnings required to cover dividends on preferred stock.
| * | The earnings for the nine month period ended September 30, 2009 and for the one month ended December 31, 2008 were inadequate to cover total fixed charges and total fixed charges and preferred stock dividends. |
The coverage deficiencies for total fixed charges for the nine month period ended September 30, 2009 and for the one month ended December 31, 2008 were $312 million and $2,023 million, respectively.
The coverage deficiencies for total fixed charges and preferred stock dividends for the nine month period ended September 30, 2009 and for the one month ended December 31, 2008 were $1,200 million and $2,518 million, respectively.