Goldman Sach Great Long Term Investment

Goldman Sach (GS) is a multinational investment banking firm, that engages in global investment banking, securities, investment management, and other financial services to primarily institutional clients. Founded in 1820, as has overtime grown to become the largest investment banking firm in the world. Many top executive of the firm have work in and around the federal government, which has made the firm the most influential Wall Street Institution in Washington D.C.

Company History

Founded in 169 by Marcus Goldman, and the firm made its name at the time by pioeering the use of commercial paper for entrepreneurs and joined the New York Stock Exchange in 1896. The firm capital grew rapidly and continued to expand its business. Goldman during the Great Depression turned away from trading and toward investment banking. It was Sideny Weinberg action that restored Goldmans tarnished reputation and he was the mover of the IPO of Ford Motors in 1956. During this time the firm became a early innovator in risk arbitrage. It continued throughout the late 1950's through the 1980s to grow and expand its business. In 1990 the firm went public, which made the top partners in the firm multimillionaries over night.

Financial Crisis

During the financial crisis with Goldman was able to secured over $4 billion in profits from shorting subprime mortgages. Which allowed the firm initially to avoid large subprime writedowns, and achieve net profits, while most of its peers where reporting heavy losses that put most of them near collapse. In September of 2008, Bershire Hathaway agreed to purchase $5 billion in Goldman preferred shares, with warrents to by another $5 billion in common stock which were execisable for a five year term. The firm also received $10 billion preferred stock investment from the US Treasury in October 2008, as part of the Trouble Asset Relief Program.

Government Capital Injected into Goldman:

• $589 billion from The Federal Reserves Primary Dealer Credit Facility
• US Treasury Term Securities Lending Facility Loaned $193 billion
• Goldman Borrowed a Totla of $782 billion in hundreds of transcation in three months.

In 2009, the firm repayed the Treasury's investment with 23% interest in the form of $318 million in preferred dividend payments and $1.4 billion in warrent redemptions. On March 18, 2011, the firm got approval to buy back its preferred stock from Berkshire Hathaway by the Federal Reserve.

Business Operations:

• Investment Bank - Accounts for 17% of total revenues
• Trading and Principal Investment - Accounts for 68% of revenues and profits
• Destress-Debt Investment - Invest in Destress Debt Globally
• Asset Management and Securities Services - Total Assets Under Supervision of $21 billion
• GS Capital Assets - Invested over $17 billion over 20 years

Major Private Equity Assets:

• The Ayco Company LP
• Hawker Beechcraft
• Cogentrix Energy
• American Casino & Entertainment Properties
• CHI James Restaurant Holdings
• USI Holdings Corporation
• East Coast Power LLC
• Queens Moat Houses
• Shineway Industrial Group
• Equity Inns. Inc
• Arcander
• Medfinders Inc
• Latin Force Group Inc
• Archon Hospitality Japan
• CMC Markets

Finances

Balance Sheet

2013 31/12	2012 31/12	2011 31/12	2010 31/12
Total Current Assets	-	-	-	-
Cash and Short Term Investments - 72669 56008 39788 Cash - 6750 7950 5750 Cash & Equivalents - 65919 48058 34038 Short Term Investments - - - - Total Receivables, Net - 91354 74465 78140 Accounts Receivables - Trade, Net - 91354 74465 78140 Total Inventory - - - - Prepaid Expenses - - - - Other Current Assets, Total - - - -
Total Assets	-	938555	923225	911332
Property/Plant/Equipment, Total - Net - 8217 8697 11106 Property/Plant/Equipment, Total - Gross - 17267 17157 18976 Accumulated Depreciation, Total - -9050 -8460 -7870 Goodwill, Net - 3702 3802 3495 Intangibles, Net - 1397 1666 2027 Long Term Investments - 685691 706000 713059 Note Receivable - Long Term - 20234 3306 3747 Other Long Term Assets, Total - 55291 69281 59970 Other Assets, Total - - - -
Total Current Liabilities	-	-	-	-
Accounts Payable - 194485 198292 190504 Payable/Accrued - 18991 4108 4650 Accrued Expenses - 8292 5701 9089 Notes Payable/Short Term Debt - 218717 215369 218496 Current Port. of LT Debt/Capital Leases - 48389 58021 49925 Other Current liabilities, Total - 72848 46642 40611
Total Liabilities	-	862839	852846	833976
Total Long Term Debt - 176270 181724 188247 Long Term Debt - 176270 181724 188247 Capital Lease Obligations - - - - Total Debt - 443376 455114 456668 Deferred Income Tax - - - - Minority Interest - 508 1450 872 Other Liabilities, Total - 124339 141539 131582
Total Equity	-	75716	70379	77356
Redeemable Preferred Stock, Total - - - - Preferred Stock - Non Redeemable, Net - 6200 3100 6957 Common Stock, Total - 8 8 8 Additional Paid-In Capital - 48030 45553 42103 Retained Earnings (Accumulated Deficit) - 65223 58834 57163 Treasury Stock - Common - -46850 -42281 -36295 ESOP Debt Guarantee - - - - Unrealized Gain (Loss) - 327 83 113 Other Equity, Total - 2778 5082 7307
Total Liabilities & Shareholders' Equity	-	938555	923225	911332
Total Common Shares Outstanding	-	465.15	485.47	507.53
Total Preferred Shares Outstanding	-	0.18	0.12	0.17

Income Statements

2013 31/12	2012 31/12	2011 31/12	2010 31/12
Total Revenue	40874	41664	36793	45967
Revenue 40874 41664 36793 45967 Other Revenue, Total - - - -
Cost of Revenue, Total	6668	7501	7982	6806
Gross Profit	34206	34163	28811	39161
Total Operating Expenses	29137	30457	30624	33075
Selling/General/Admin. Expenses, Total 14923 15188 14871 17892 Research & Development - - - - Depreciation / Amortization 1322 1335 1439 1915 Interest Expense (Income) - Net Operating - - - - Unusual Expense (Income) - 410 440 466 Other Operating Expenses, Total 6224 6023 5892 5996
Operating Income	11737	11207	6169	12892
Interest Income (Expense), Net Non-Operating	-	-	-	-
Gain (Loss) on Sale of Assets	-	-	-	-
Other, Net	-	-	-	-
Net Income Before Taxes	11737	11207	6169	12892
Provision for Income Taxes	3697	3732	1727	4538
Net Income After Taxes	8040	7475	4442	8354
Minority Interest	-	-	-	-
Equity In Affiliates	-	-	-	-
U.S GAAP Adjustment	-	-	-	-
Net Income Before Extraordinary Items	8040	7475	4442	8354
Total Extraordinary Items	-	-	-	-
Net Income	8040	7475	4442	8354
Total Adjustments to Net Income	-314	-183	-1932	-641
Income Available to Common Excluding Extraordinary Items	7726	7292	2510	7713
Dilution Adjustment	-	-	-	-
Diluted Net Income	7726	7292	2510	7713
Diluted Weighted Average Shares	499.6	516.1	556.9	585.3
Diluted EPS Excluding Extraordinary Items	15.46	14.13	4.51	13.18
DPS - Common Stock Primary Issue	2.05	1.77	1.4	1.4
Diluted Normalized EPS	16.78	14.01	5.08	15.22

The firm produced net revenues of $34.2 billion and net earnings of $8 billion, an eight percent increase from $7.5 billion in net earnings from 2012. Diluted earnings per share were $15.46 compared to $14.13 for 2012. Revenues that reflect Clients Services segment decreased 13% to $15 billion, and U.S. segment deceased 1% to $19 billion. It leverage ratio has fallen by more than one-half from 26 times at the end of 2007 to less then 12 times in 2013. Goldman's excess liquidity as a percentage as a percentage of total assets, grown from 5% at the end of 2007 to more than 20% at the end of 2013. Shareholder equity has grown from nearly $43 billion in 2008, to $78 billion at the end of 2013, which is a 83% increases the last 6 years. Capital ratios continued to improve despite returning $7.2 billion to shareholders through dividends and share buybacks.

Financial Assets and Liquidity

Ratio's	2013	2012	2011
Return on Assets	0.84%	0.78%	0.27%
Return on Equity	11.00%	10.70%	3.7%
Debt to Equity	2.26	2.41	2.58
Leverage Ratio	11.6x	12.4x	13/1x
Tier 1 Common	14.6%	14.5%	12.1%
Tier 1 Capital	16.7%	16.7%	13.8%

Valuation

Goldman Sach currently sells for 10x its earnings, 9.4x forward earnings, 6.1x its pretax earnings 1x its book value, and sells for over 20x its free cash flow. Goldman isn't screaming undervalued but it is selling below its fair value. The firm should trade at more then 10x its earnings which make Goldman one of the cheap large financial firms in the market today. Morgan Stanly one of Goldman sells for 20x its earnings which is high unrealistic multiple for Goldman to trade to. Goldman to should for between 12x to 15x its earnings that is reasonable multiple for the firm. If Goldman sold at 12x its normalized earnings then it would sell for $185.64 per share or 15x then it would sell for $231.30. If Goldman sold at 10x its pretax earnings, it would sell for $259.20 per share which mean you can buy Goldman at 6x its pretax earnings and get a 16% pretax return on your potential investment. Goldman has a fair value range of $185 to $231 per share.