Morgan Stanley (MS) 10-Q 2010 Q1 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 March  31, 2010		2009		Fiscal 2008		Fiscal 2007		Fiscal 2006		Fiscal 2005		One Month Ended December  31, 2008
Ratio of Earnings to Fixed Charges
Earnings:
Income (loss) before income taxes(1)	$	2,582	$	808	$	1,396	$	3,192	$	8,564	$	5,340	$	(2,028	)
Add: Fixed charges, net		1,440		7,144		36,709		58,320		41,984		24,594		1,163
Income (loss) before income taxes and fixed charges, net	$	4,022	$	7,952	$	38,105	$	61,512	$	50,548	$	29,934	$	(865	)
Fixed Charges:
Total interest expense	$	1,368	$	6,893	$	36,485	$	58,108	$	41,876	$	24,466	$	1,143
Interest factor in rents		72		251		224		212		108		128		20
Total fixed charges	$	1,440	$	7,144	$	36,709	$	58,320	$	41,984	$	24,594	$	1,163
Ratio of earnings to fixed charges		2.8		1.1		1.0		1.1		1.2		1.2		*
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends
Earnings:
Income (loss) before income taxes(1)	$	2,582	$	808	$	1,396	$	3,192	$	8,564	$	5,340	$	(2,028	)
Add: Fixed charges, net		1,440		7,144		36,709		58,320		41,984		24,594		1,163
Income (loss) before income taxes and fixed charges, net	$	4,022	$	7,952	$	38,105	$	61,512	$	50,548	$	29,934	$	(865	)
Fixed Charges:
Total interest expense	$	1,368	$	6,893	$	36,485	$	58,108	$	41,876	$	24,466	$	1,143
Interest factor in rents		72		251		224		212		108		128		20
Preferred stock dividends		266		2,041		112		86		27		—		495
Total fixed charges and preferred stock dividends	$	1,706	$	9,185	$	36,821	$	58,406	$	42,011	$	24,594	$	1,658
Ratio of earnings to fixed charges and preferred stock dividends		2.4		0.9		1.0		1.1		1.2		1.2		*

(1) Income (loss) 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 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 one month ended December 31, 2008 were $2,028.

The coverage deficiencies for total fixed charges and preferred stock dividends for the one month ended December 31, 2008 were $2,523.