Goldman Sachs 2012 Annual Report Download - page 67

Management’s Discussion and Analysis
Balance Sheet Analysis and Metrics
As of December 2012, total assets on our consolidated
statements of financial condition were $938.56 billion, an
increase of $15.33 billion from December 2011. This
increase was primarily due to (i) an increase in financial
instruments owned, at fair value of $42.81 billion, due to
increases in equities and convertible debentures and
non-U.S. government and agency obligations and (ii) an
increase in cash and cash equivalents of $16.66 billion,
primarily due to increases in interest-bearing deposits with
banks. These increases were partially offset by decreases in
securities purchased under agreements to resell and federal
funds sold of $46.46 billion, primarily due to firm and
client activities.
As of December 2012, total liabilities on our consolidated
statements of financial condition were $862.84 billion, an
increase of $9.99 billion from December 2011. This
increase was primarily due to an increase in deposits of
$24.02 billion, primarily due to increases in client activity.
This increase was partially offset by a decrease in financial
instruments sold, but not yet purchased, at fair value of
$18.37 billion, primarily due to decreases in derivatives and
U.S. government and federal agency obligations.
As of December 2012, our total securities sold under
agreements to repurchase, accounted for as collateralized
financings, were $171.81 billion, which was essentially
unchanged and 3% higher than the daily average amount of
repurchase agreements during the quarter ended and year
ended December 2012, respectively. As of December 2012,
the increase in our repurchase agreements relative to the
daily average during the year was primarily due to an
increase in firm financing activities. As of December 2011,
our total securities sold under agreements to repurchase,
accounted for as collateralized financings, were
$164.50 billion, which was 7% higher and 3% higher than
the daily average amount of repurchase agreements during
the quarter ended and year ended December 2011,
respectively. As of December 2011, the increase in our
repurchase agreements relative to the daily average during
the quarter and year was primarily due to increases in client
activity at the end of the year. The level of our repurchase
agreements fluctuates between and within periods,
primarily due to providing clients with access to highly
liquid collateral, such as U.S. government and federal
agency, and investment-grade sovereign obligations
through collateralized financing activities.
The table below presents information on our assets,
unsecured long-term borrowings, shareholders’ equity and
leverage ratios.
As of December
$ in millions 2012 2011
Total assets $938,555 $923,225
Adjusted assets $686,874 $604,391
Unsecured long-term borrowings $167,305 $173,545
Total shareholders’ equity $ 75,716 $ 70,379
Leverage ratio 12.4x 13.1x
Adjusted leverage ratio 9.1x 8.6x
Debt to equity ratio 2.2x 2.5x
Adjusted assets. Adjusted assets equals total assets less
(i) low-risk collateralized assets generally associated with
our secured client financing transactions, federal funds sold
and excess liquidity (which includes financial instruments
sold, but not yet purchased, at fair value, less derivative
liabilities) and (ii) cash and securities we segregate for
regulatory and other purposes. Adjusted assets is a
non-GAAP measure and may not be comparable to similar
non-GAAP measures used by other companies.
The table below presents the reconciliation of total assets to
adjusted assets.
As of December
in millions 2012 2011
Total assets $ 938,555 $ 923,225
Deduct: Securities borrowed (136,893) (153,341)
Securities purchased under
agreements to resell and
federal funds sold (141,334) (187,789)
Add: Financial instruments sold, but
not yet purchased, at fair value 126,644 145,013
Less derivative liabilities (50,427) (58,453)
Subtotal (202,010) (254,570)
Deduct: Cash and securities segregated
for regulatory and other
purposes (49,671) (64,264)
Adjusted assets $ 686,874 $ 604,391
Leverage ratio. The leverage ratio equals total assets
divided by total shareholders’ equity and measures the
proportion of equity and debt the firm is using to finance
assets. This ratio is different from the Tier 1 leverage ratio
included in “Equity Capital — Consolidated Regulatory
Capital Ratios” below, and further described in Note 20 to
the consolidated financial statements.
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