GS

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viktor_k67

The GS stock's market cap = 73.6B
the GS total debt = 385.4B
source: http://finance.yahoo.com/quote/GS/key-statistics?p=GS

the total debt is 5 times bgger than the market cap. I guess this is why Enterprise walue is -285.13B. The stock has decent cash flow price to cash flow ratiois around 5.

Today's GS's earning report is great:
http://www.nasdaq.com/earnings/report/gs

However, debt scares. What is going to happen when interst rates go up? Do you think it will affect the GS operation? Is it a safe stock?
 
GS uses the debt to run their ongoing long/short business. We as a small market maker used to have a massive balance sheet as well... but it was all hedged... options with stocks. But you still need the capital.

Look at it this way... you're long stock and short the synthetic through -call + put options. You're capital needed is (if you traded ATM options) basically the amount of stock. You're fully hedged, no risk in movement of underlying stock, because delta is zero. So, no risk... but need of capital. So you use your bank's capital/debt. No big deal.

If that debt is mainly used for their trading strategies... their interest rate exposure would be hedged for the main part, if not all of it.
And it's not like they have Lehman-style 100x leveraged position... it's only about 5x.

EDIT- That said... we don't know what their total market exposure is. Probably a lot more effectively leveraged than 5x with cross market derivatives.
 
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