Transcription of Financial Statement Analysis
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Financial Statement AnalysisyLeverage, Liquidity and SolvencyReid GrossmannReid GrossmannRMG Financial Consulting, IncTreatment of Derivatives: A Layman s GuideMitch TaylorMacquarie Capital (USA) IncMacquarie Capital (USA), IncDenver, Colorado,May 6, 2010 aaaaaaa1A Tale of Two MeltdownsRMG Financial Consulting Lehman BrothersAn issue of leverage, solvency, liquidity and confidenceAn issue of leverage, solvency, liquidity and confidenceConstellation Energy GroupAn issue of leverage liquidity and confidenceAn issue of leverage, liquidity and confidenceaaaaaaa2 Lehman Brothers - Leverage and LiquidityRMG Financial Consulting Assets Under Management (millions)$277,000$282,000$225,000$175,0 00$137 000 Like most of its peers Lehman Brothers had a high degree of leverage (over 30 times) and a balance sheet full of assets of questionable l$137,000$120,000 YTD Q22008 FYE 2007 FYE 2006 FYE 2005 FYE 2004 FYE had been postponing the type of asset write downs that many of its peers had been posting since Q4 of Equity$26,276$22,490$19,191$16,794$14,92 0$13,174pg QLehman also resisted the need to source additional capital also had less ready liquidity than mostYTD Q22008 FYE 2007 FYE 2006 FYE 2005 FYE 2004 FYE 2003It also had less ready liquidity than Liquidity as of Q2 2008:($ in millions)Total FacilityUsedLC
Financial Statement Analysis Leverage, Liquidity and Solvency Reid GrossmannReid Grossmann RMG Financial Consulting, Inc Treatment of Derivatives: A Layman’s Guide
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