http://investors.interactivebrokers.com/download/Q3_11_earnings_release.pdf Page 8 Assets Total Equity $4.633bn Liabilities Senior Notes $125.9m Short term loans $151.8m What other liability figures should be used to calculate leverage?
I make it 0.059 to 1 compared with MFG 40 to 1. Do comment if you think any other figure should be added to IB liabilities.
You are not looking at balance sheet leverage in the right way. You want to look at the total of assets that might suffer a significant loss of value versus the capital. First the asset side. Cash, cash equivalents and well collateralized receivables are not at risk. Of IB's $33 billion in total assets you subtract out $18.7 billion, leaving $14.3 billion at risk. Next the capital side. Capital is equity plus long term borrowing. $4.633 billion of equity plus $125 million of Senior notes is $4.758 billion. Leverage is $14.3 billion divided by $4.758 billion equal to 3.00.
What is the leverage for MF G on the latest balance sheet (equivalent)? I heard someone say 40-1, another said 80-1? How do other FCMs compare?
This article says 33 to 1 for mfg. http://www.reuters.com/article/2011/11/03/us-mfglobal-corzine-idUSTRE79U0TT20111103 Anybody else want to have a go at working out IB leverage?
This article says 80-1 leverage:- http://www.forbes.com/sites/robertl...ad-mf-global-leveraged-80-to-1/?feed=rss_home They seem to divide $40 billion assets by $500 million equity capital
The 33-to-1 MF ratio comes from dividing aggregate total assets ($45.93B) by total equity ($1.39B). If you do the same to IB the number appears to be a paultry 7-to-1 ($33.15B assets vs. $4.63B equity). As for the 80-to-1 ratio, this is a total guess, but it looks like they might be taking "Securities purchased under agreements to resell" ($12.06B) plus "Securities owned" ($11.57B) and dividing that total by preferred stock ($130.6M) plus common stock ($164.9M). That yields 80-to-1. Assuming this is accurate, then IB's numbers would be (I think) "Securities purchased under agreements to resell" ($0.46B) plus "Trading assets, at fair value" ($8.88B) divided by $565.7M in common equity. This yields a 16.5-to-1 ratio. I was also freaked out by IB's numbers initially, but I was getting my balance sheet data from Yahoo Finance, which for some reason is way off the mark.
Total assets at mfg was european government debt for it's own account, at IB total assets is customer deposits and stock so it is not a fair comparison.
So, would my 80-to-1 vs 16.5-to-1 calculation be more apples-to-apples then? Trust me, I'm likewise trying to figure this out because I have a tiny MF account that's currently inaccessible, but I have a substantial account at IB that I'd like to feel comfortable keeping 100% there. Best.