Balance Sheet Leverage in the Financial System. Balance Sheet | Goldman Sachs Total Assets = $859,914,000 Total.

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Presentation transcript:

Balance Sheet Leverage in the Financial System

Balance Sheet | Goldman Sachs Total Assets = $859,914,000 Total Liabilities = $778,285,000 Total Equity (Net Worth) = $81,629,000

Balance Sheet | Goldman Sachs Leverage = Total Liabilities/ Net Worth (Equity)  778,285,000/ 81,629,000 = 9,53 For every $10 of assets the bank holds, $9,53 is financed by borrowing and $0,47 input by shareholders. (What proportion of debt and equity, is the company using to finance their assets?)

Balance Sheet | Goldman Sachs For each $100 of assets, how much is financed with equity and how much with debt? Equity Ratio = Equity/Assets  81,629,000/859,914,000 = 0,09 For each $100 of assets, $9 is financed by Equity and $91 is financed by Liabilities (Proportio of equity used to finance Company’s assets)

Balance Sheet | Goldman Sachs By what percentage would assets have to decline in value to bankrupt the Financial Institution?

Balance Sheet | AIG Total Assets = $529,109,000 Total Liabilities = $420,948,000 Total Equity (Net Worth) = $108,161,000

Balance Sheet | AIG Leverage? Equity Ratio? Bankrupt?