Morgan Stanley has reported total liabilities of $246.22 billion, with a debt to equity ratio (D/E) of 3.42. This suggests that Morgan Stanley relies heavily on debt financing. The company has a current ratio of 1.96, which is generally considered to be within the normal range. While debt can support Morgan Stanley's operations, it could also pose a risk if the company struggles to repay it, either through new capital or free cash flow. In such a scenario, Morgan Stanley's shareholders could potentially lose their entire investment if the company fails to meet its legal debt repayment obligations. However, a more common scenario is for companies like Morgan Stanley to issue additional shares at discounted prices, thereby diluting the value of existing shares. Despite this, debt can be an effective tool for Morgan Stanley to invest in growth opportunities that yield high returns. When evaluating Morgan Stanley's use of debt, it's important to consider it in conjunction with the company's cash and equity positions.
Rigorous look on Morgan
Morgan Stanley's investment potential is underscored by its robust financial position, with a net invested capital of
337.6B and a begin period cash flow of 127.7B. However, the firm's change in working capital is a loss of 23.5B, indicating a potential risk. The company's downside variance of 2.2 and maximum drawdown of 5.98 further highlight this risk, despite a promising price action indicator of 2.01. Nonetheless, with a forward dividend yield of 0.0361 and net income applicable to common shares standing at 10.5B, Morgan Stanley's stock still presents a viable investment opportunity for those willing to leverage against the risks.
Morgan Stanley financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Morgan Stanley, including all of Morgan Stanley's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Morgan Stanley assets, the company is considered highly leveraged. Understanding the
composition and structure of overall Morgan Stanley debt and outstanding corporate bonds gives a good idea of
how risky the capital structure of a business is and if it is worth investing in it. Please read more on our
technical analysis page.
Understanding Morgan Total Liabilities
Morgan Stanley liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Morgan Stanley has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on Morgan Stanley balance sheet include debt obligations and money owed to different Morgan Stanley vendors, workers, and loan providers. Below is the chart of Morgan short long-term liabilities accounts currently reported on its balance sheet.
You can use Morgan Stanley
financial leverage analysis tool to get a better grip on understanding its financial position
How important is Morgan Stanley's Liquidity
Morgan Stanley
financial leverage refers to using borrowed capital as a funding source to finance Morgan Stanley ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Morgan Stanley financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Morgan Stanley's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Morgan Stanley's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the
breakdown between Morgan Stanley's total debt and its cash.
Another Deeper Perspective
The firm generated the yearly revenue of 50.21
B. Reported Net Income was 11.18
B with gross profit of 46.44
B. Morgan Stanley, a leading player in the Capital Markets industry, has shown considerable financial strength, with a total of **$1180.2B** in assets. The firm's net income from continuing operations stands at a healthy $11.2B, further underscoring its financial stability. Moreover, the company's net invested capital is a significant $337.6B, indicating a robust investment strategy. In terms of leverage, Morgan Stanley has a total debt of **$246.22B**, including long-term debt of $238.1B. However, it maintains a current ratio of 2.00X, indicating a strong ability to cover its short-term liabilities.
The firm's short long-term debt total is $246.2B, which is manageable given its overall financial position. The company has also shown a commitment to returning value to shareholders, with a forward dividend yield of 0.0361. Despite a negative free cash flow of $9.5B, the company's retained earnings stand at an impressive $94.86B. In terms of market risk, Morgan Stanley has a beta of 1.32, indicating higher volatility than the market. However, the downside deviation of 1.48 and the Value At Risk of -2.38 suggest that the company has managed its risk exposure effectively. In conclusion, Morgan Stanley presents a compelling investment opportunity, given its financial strength and effective risk management. .
Will Morgan private investors trade after the next drop?
Morgan Stanley's latest mean deviation, a measure of volatility, is currently at 1.11. This indicates a relatively moderate level of risk, suggesting that the stock's price movements have been fairly consistent. This level of stability could be appealing to individual investors seeking a steady investment. However, given potential market uncertainties, individual investors should exercise caution. Should a price drop occur, it could present a buying opportunity. Nevertheless, investors should thoroughly assess their risk tolerance and investment objectives before making any decisions. Morgan Stanley exhibits relatively low volatility, with a skewness of -0.04 and a kurtosis of -0.34. We strongly recommend that all investors independently research Morgan Stanley to ensure that all available information aligns with their expectations of its upside potential and future expected returns. Understanding different
market volatility trends can often assist investors in timing the market. Utilizing volatility indicators properly allows traders to measure Morgan Stanley's stock risk against market volatility during both bullish and bearish trends. The heightened level of volatility that accompanies bear markets can directly impact
Morgan Stanley's stock price, causing stress for investors as they watch the value of their shares decrease. This often compels investors to rebalance their portfolios by purchasing different stocks as prices decline.
The Current Takeaway on Morgan Stanley Investment
When is the right time to buy or sell Morgan Stanley? Buying stocks such as Morgan Stanley isn't very hard. However, what challenging for most investors is doing it at the right time. Proper
market timing is something most people cannot do without
sophisticated tools, which help to isolate the right opportunities, deliver winning trades and diversify portfolios on a daily basis.
With a less-than optimistic outlook for your 90 days horizon, it may be a good time to exit some or all of your Morgan Stanley holdings as it seems the potential growth was already fully factored into the current price. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Morgan Stanley.
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Ellen Johnson is a Member of Macroaxis Editorial Board. Ellen covers public companies in North America, focusing primarily on valuation and volatility. Six years of experience in predictive investment analytics and risk management.
View Profile This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Ellen Johnson do not own shares of Morgan Stanley. Please refer to our
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