Exhibit 12
Morgan Stanley
Ratio of Earnings to Fixed Charges
and Ratio of Earnings to Fixed Charges and Preferred Stock Dividends
(dollars in millions)
| Fiscal Year | |||||||||||||||
| 2006 | 2005 | 2004 | 2003 | 2002 | |||||||||||
| Ratio of Earnings to Fixed Charges |
|||||||||||||||
| Earnings: |
|||||||||||||||
| Income before income taxes (1) |
$ | 10,830 | $ | 7,361 | $ | 6,818 | $ | 6,160 | $ | 4,859 | |||||
| Add: Fixed charges, net |
42,115 | 24,637 | 14,871 | 12,856 | 12,688 | ||||||||||
| Income before income taxes and fixed charges, net |
$ | 52,945 | $ | 31,998 | $ | 21,689 | $ | 19,016 | $ | 17,547 | |||||
| Fixed Charges: |
|||||||||||||||
| Total interest expense |
$ | 41,937 | $ | 24,425 | $ | 14,707 | $ | 12,693 | $ | 12,515 | |||||
| Interest factor in rents |
178 | 212 | 164 | 163 | 173 | ||||||||||
| Dividends on preferred securities subject to mandatory redemption |
— | — | 45 | 154 | 87 | ||||||||||
| Total fixed charges |
$ | 42,115 | $ | 24,637 | $ | 14,916 | $ | 13,010 | $ | 12,775 | |||||
| Ratio of earnings to fixed charges |
1.3 | 1.3 | 1.5 | 1.5 | 1.4 | ||||||||||
| Ratio of Earnings to Fixed Charges and Preferred Stock Dividends |
|||||||||||||||
| Earnings: |
|||||||||||||||
| Income before income taxes (1) |
$ | 10,830 | $ | 7,361 | $ | 6,818 | $ | 6,160 | $ | 4,859 | |||||
| Add: Fixed charges, net |
42,115 | 24,637 | 14,871 | 12,856 | 12,688 | ||||||||||
| Income before income taxes and fixed charges, net |
$ | 52,945 | $ | 31,998 | $ | 21,689 | $ | 19,016 | $ | 17,547 | |||||
| Fixed Charges: |
|||||||||||||||
| Total interest expense |
$ | 41,937 | $ | 24,425 | $ | 14,707 | $ | 12,693 | $ | 12,515 | |||||
| Interest factor in rents |
178 | 212 | 164 | 163 | 173 | ||||||||||
| Dividends on preferred securities subject to mandatory redemption |
— | — | 45 | 154 | 87 | ||||||||||
| Preferred stock dividends |
19 | — | — | — | — | ||||||||||
| Total fixed charges and preferred stock dividends |
$ | 42,134 | $ | 24,637 | $ | 14,916 | $ | 13,010 | $ | 12,775 | |||||
| Ratio of earnings to fixed charges and preferred stock dividends |
1.3 | 1.3 | 1.5 | 1.5 | 1.4 | ||||||||||
| (1) |
Income before income taxes does not include losses from unconsolidated investees, dividends on preferred securities subject to mandatory redemption, loss on discontinued operations, cumulative effect of accounting change (net) and income (loss) from investments accounted for under the equity method of accounting. |
“Fixed charges” consist of interest cost, including interest on deposit, dividends on preferred securities subject to mandatory redemption, and that portion of rent expense estimated to be representative of the interest factor.
The preferred stock dividend amounts represent pre-tax earnings required to cover dividends on preferred stock.