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THE GOLDMAN SACHS GROUP, INC.

Basic Accounting Final Paper
Basic Accounting Final Paper

Claire Dillow June 7 th , 2010 Basic Accounting Lisa Anderson Final Paper

COMPANY DESCRIPTION

The Goldman Sachs Group is a financial services company within the Diversified

Investments industry. These include: investment banking, asset management, trading and securities

transaction services. The company’s headquarters are located in New York City and they currently

employ 38,500 people. Their services are predominantly rendered to corporations, financial

institutions, governments and individual people who have a high net-worth. These services are

primarily provided to such individuals within the United States, Europe and Asia. Goldman Sachs

does, however, have offices in over twenty-five countries and forty cities worldwide. 1 By the end of

2007, the corporation’s assets under management were an estimated $868 billion, thereby making its

success and power apparent.

Goldman Sachs has three primary business channels: investment banking, trading and

principal investments in addition to asset management and securities service. The Investment

Banking sector of Goldman Sachs is comprised of two elements: financial advising and

underwriting. The financial advisory services include advising specific to mergers, acquisitions,

corporate defense activities, restructuring and spin-offs. One goal of the Investment Banking

segment is to establish and uphold concrete relationships with clients and their investment bank of

choice. The underwriting assistance provided to their clients is most often particular to the

underwriting of equity and debt.

The Trading and Principal Investments segment specializes in the trading and investing of

commodities. Included in this subdivision are: fixed income, currency and commodities (FICC),

equities and principal investments. This aspect of the company also helps to ease client transactions

with larger entities. The FICC aids in market marking, trading commodities, currencies, interest rate

products, mortgage related securities among others. Goldman Sachs trades in a wide assortment of

1 "Goldman Sachs Group: Company Profile." Datamonitor. 9 Apr. 2010. Web.

supplies like oil and related products, metals, natural gas, electricity, and lumber. A client who

employs the services of Goldman Sachs is able to utilize this selection of diverse supplies offered to

their advantage. Not only do they provide a client with trade and purchase options with these

assorted commodities, but they also buy or trade these supplies on their own account. A purchase

on account is a transaction in which merchandise purchased is to be paid for at a later date.

Employing this method would ease the mind of a client who might have reservations about having

the adequate funds to pay for these remarkable opportunities. Principal Investments generate

revenue from returns on corporate and real estate investments.

The Asset Management division facilitates investment advising and financial planning. Asset

Management generates revenue in terms of management and incentive fees. The assets which the

company manages for investors consist of mutual funds, alternative investment funds and separately

managed accounts. The Securities Services offers prime brokerage, financing services and securities

lending. This department of Goldman Sachs generates revenue in the form of interest rate fees.

BRIEF HISTORY

Goldman Sachs was founded in New York in 1869 by a German Jewish immigrant named

Marcus Goldman. The company began as a broker of promissory notes. As defined by the

Encyclopedia Britannica, a promissory note is “a short-term credit instrument consisting of a written

promise by one person (maker) to pay a specified amount of money to another on demand or at a

given future date. Promissory notes are often negotiable and may be secured by the pledge of

collateral.” 2 The company was later renamed “Goldman Sachs & Company” in 1885. Shortly after

this name change, the company began to examine foreign exchange and currency services. In 1896,

Goldman Sachs became a partnership. By the end of the same century, Goldman Sachs & Co.

2 "Promissory note." Encyclopedia Britannica. 2010. Encyclopedia Britannica Online. 11 Jun. 2010

earned a majority of its capital on the commercial paper market with its central location on Pine

Street in New York City. 3

Goldman Sachs is regarded as the pioneer of buying and selling stocks in large quantities.

The corporation set the standard for the industry by being the first to procure private investors.

With this brought enough success that the company was somehow able to endure the extreme

financial pressures brought on by the stock market crash of 1929. By 1930, Sidney Weinburg became

the company’s senior partner and the company was thus delving into the securities industry.

In the 1950’s, the company decided to dedicate a separate portion of their company to

investment banking and this derivative quickly became a market leader. In 1970, Goldman Sachs

opened in the United Kingdom and thereby expanding their focus internationally. They furthered

their international endeavors by establishing offices and hubs in Japan and Switzerland in 1974.

Goldman Sachs acquired a company known as J Aron in 1981 which presented them with

two significant advantages. First, the acquisition of this company enhanced the commodities

business as a whole. Second, this also strengthened Goldman Sach’s presence and relations in South

America. In the 1986 market crash, Goldman Sachs was in effect bailed out with $500 million by

Sumitomo Mitsui Financial Group in exchange for 12.5% of Goldman Sach’s upcoming profits.

The 1994 bond crash led to debt issues which forced the company to fire a significant

number of employees for the first time since the 1980s hardship. The cost cut that resulted from this

layoff ultimately paid off for Goldman Sachs and they were able to recuperate. By the late 1990’s,

the company once again set its sights back to international markets in the UK and Asia.

The late nineties, specifically 1998, marks the time when Goldman Sachs was converted

from a partnership to a corporation, or an organization with the legal rights of a person and which

3 "Goldman Sachs Group: Company Profile." Datamonitor. 9 Apr. 2010. Web.

man persons may own. This was possible after thirty years of pleading with the partners of the

company to sell the minority stake of shares to the public. Goldman Sachs (GS) was incorporated in

the New York Stock Exchange in 1999.From this point on, Goldman Sachs has been able to

consistently grow without repercussions and continues to report significant increases year after year.

This can be particularly demonstrated by its drastic revenue increase from the end of the fiscal year

2006 to the beginning of 2007. A fiscal year can be defined as the length of time from which a

business summarizes financial information. In 2006, the company’s net revenue was $10 billion with

earnings per share (the amount of net income after federal income tax belonging to a single share

of stock) at $19.69. By 2007, the net revenue rose to barely under $46 billion with earnings per share

at $24.73.

Located in Appendix A is a comprehensive company profile for Goldman Sachs Group, Inc.

FINANCIAL STATEMENTS

This section includes the financial statements for Goldman Sachs, or financial reports that

summarize the financial conditions and operations for a company. A financial statement is one

example of an accounting record by being an organized summary of a business’ financial activities.

Business owners and managers use information from financial statements to make business

decisions, thus acting as an accounting system. Financial statements can be used to analyze a

company’s success or failure. This can be done by comparing multiple financial statements to one

another. A comparison between two items of financial information is called a financial ratio which

can also provide helpful insight into the financial performance of a business. There are multiple ways

in which these statements can be compared in order to determine trends in a company. “Four main

types of comparison are made: (1) comparison of statements for the enterprise between successive

years (2) comparison of a firm's statements with those of a specific competitor (3) comparison of a

firm against an industry standard and (4) comparison with a target, such as a company's budget.

Comparisons between different organizations may be difficult or even meaningless because of

differences in (1) size of the organization (2) type of organization and (3) accounting methods used

by the organization. Often, both the size and type of organization will dictate the kind of accounting

methods used.” 4

Balance Sheet

The chart below represents the Annual balance sheet for Goldman Sachs Group, Inc. for

at least the past four years. A balance sheet can be defined as a financial statement reporting assets,

liabilities and owner’s equity on a specific date used to calculate the net worth of a business. It can

also provide information about available resources and the claims to such resources. A balance sheet

is more precisely described as “a basic tenet of double-entry book-keeping is that total assets (what a

business owns) must equal liabilities plus equity (how the assets are financed).” 5 This relationship

between assets, liabilities and owner’s equity is defined by the accounting equation or assets =

liabilities + owner’s equity. This equation must always be in balance and a balance sheet is prepared

in order to ensure that these amounts are in fact balanced. Sometimes a business activity can alter

assets, liabilities or owner’s equity. This is known as a transaction. A transaction that alters either

one of these factors much ultimately led to the accounting equation remaining balanced.

The amounts in this chart are represented in U.S. millions of dollars.

Annual Balance Sheet

Financial data in U.S. Dollars Values in Millions (Except for per share items)

4 "THE USES OF FINANCIAL STATEMENTS." BEN BEST's HOME PAGE. Web. 11 June 2010. <http://www.benbest.com/business/finance.html>.

5 "Term Definition: Balance Sheet." Business & Small Business. Web. 11 June 2010. <http://www.entrepreneur.com/encyclopedia/term/82186.html>.

2009

2008

2008

2007

2006

Period End Date

 

12/31/2009

12/26/2008

11/28/2008

11/30/2007

11/24/2006

Stmt Source

 

10-K

10-Q

10-K

10-K

10-K

Stmt Source Date

 

03/01/2010

05/06/2009

03/01/2010

01/27/2009

01/29/2008

Stmt Update Type

Updated

Updated

Reclassified

Reclassified

Reclassified

 

Assets

Cash and Short Term Investments

Cash and Short Term Investments

38,291.0

13,805.0

15,740.0

10,282.0

6,293.0

 

Cash & Equivalents

 
  Total Receivables, Net 67,900.0 86,377.0 90,564.0 148,183.0 93,013.0

Total Receivables, Net

67,900.0

86,377.0

90,564.0

148,183.0

93,013.0

Accounts Receivable - Trade, Net

 
 

Total Inventory

0.0

0.0

0.0

0.0

0.0

 

Prepaid Expenses

0.0

0.0

0.0

0.0

0.0

Other Current Assets, Total

0.0

0.0

0.0

0.0

0.0

Property/Plant/Equipment, Total - Net

11,380.0

12,589.0

10,793.0

8,975.0

6,990.0

 

Goodwill, Net

3,543.0

3,526.0

3,523.0

3,321.0

3,184.0

 

Intangibles, Net

1,377.0

1,620.0

1,529.0

1,771.0

2,502.0

 

Long Term Investments

678,104.0

869,279.0

642,595.0

819,339.0

638,793.0

Note Receivable - Long Term

3,747.0

3,139.0

4,780.0

3,809.0

3,009.0

Other Long Term Assets, Total

44,600.0

121,890.0

115,023.0

124,116.0

84,417.0

 

Other Assets, Total

0.0

0.0

0.0

0.0

0.0

 

Total Assets

848,942.0 1,112,225.0

884,547.0 1,119,796.0

838,201.0

Liabilities and Shareholders' Equity

 
 

Accounts Payable

185,634.0

245,725.0

253,843.0

318,453.0

213,177.0

 

Payable/Accrued

5,455.0

5,877.0

4,388.0

4,749.0

3,832.0

 

Accrued Expenses

11,170.0

4,968.0

4,646.0

11,816.0

9,165.0

Notes Payable/Short Term Debt

54,416.0

61,717.0

63,166.0

129,920.0

89,927.0

Current Port. of LT Debt/Capital Leases

17,928.0

24,274.0

26,281.0

22,740.0

14,115.0

Other Current Liabilities, Total

43,440.0

35,249.0

30,508.0

17,916.0

13,336.0

Total Current Liabilities

0.0

0.0

0.0

0.0

0.0

 
  Total Long Term Debt 196,288.0 203,977.0 185,678.0 197,474.0 148,976.0

Total Long Term Debt

196,288.0

203,977.0

185,678.0

197,474.0

148,976.0

 

Long Term Debt

 

Deferred Income Tax

0.0

0.0

0.0

0.0

0.0

 

Minority Interest

960.0

1,102.0

1,127.0

7,265.0

2,069.0

 

Other Liabilities, Total

262,937.0

466,282.0

250,541.0

366,663.0

307,818.0

 

Total Liabilities

778,228.0 1,049,171.0

820,178.0 1,076,996.0

802,415.0

Redeemable Preferred Stock

6,957.0

16,483.0

16,471.0

3,100.0

3,100.0

Preferred Stock - Non Redeemable, Net

0.0

0.0

0.0

0.0

0.0

Common Stock

6,253.0

9,470.0

9,291.0

9,308.0

6,296.0

Additional Paid-In Capital

39,770.0

31,070.0

31,071.0

22,027.0

19,731.0

Retained Earnings (Accumulated Deficit)

50,252.0

38,579.0

39,913.0

38,642.0

27,868.0

Treasury Stock - Common

-32,156.0

-32,176.0

-32,175.0

-30,159.0

-21,230.0

Other Equity, Total

-362.0

-372.0

-202.0

-118.0

21.0

Total Equity

70,714.0

63,054.0

64,369.0

42,800.0

35,786.0

Total Liabilities & Shareholders’ Equity

848,942.0 1,112,225.0

884,547.0 1,119,796.0

838,201.0

Total Common Shares Outstanding

515.11

442.55

442.54

390.68

412.67

Total Preferred Shares Outstanding

0.17

10.17

10.17

0.12

0.12

Source: "GS Company Report, Financial Results, Key Ratios, Income Statement - MSN Money." Personal Finance and Investing - MSN Money. Web. 11

June 2010. <http://moneycentral.msn.com/companyreport?Symbol=GS>.

On the above balance sheet, a series of records summarizing all the information pertaining

to either assets, liabilities, or owner’s equity, also known as accounts can be seen. Each account has

an account title which is the name given to an account in order to define it.

The first series of

accounts listed are assets, which are anything of value that is owned by the company. Assets for

Goldman Sachs are listed in terms of a variety of categories. First shown is Cash and Long Term

Investments, which includes all investments owned by the company that can't be converted to cash

in less than one year. Next is Cash & Equivalents, and the cash listed here is the cash on hand at the

time books are closed at the end of the fiscal year. This refers to all cash in checking, savings and

short-term investment accounts. Next are the Total Receivables- Net and Accounts Receivable-

Trade- Net. Accounts Receivable is the income derived from credit accounts. In terms of the

balance sheet, accounts receivable is the total amount of income to be received that is logged into

the books at the close of the fiscal year. 6 The next listed are Total Inventory, which is derived from

the cost of goods table; it is the inventory of material used to manufacture a product not yet sold.

Next shown is the Prepaid Expenses then Other Current Assets- Total. Current Assets are

cash and other assets expected to be exchanged for cash or to be consumed within a year and the

total current assets equals the sum of cash, accounts receivable, inventory and supplies.

All other assets that appear in the balance sheet are considered long-term or fixed assets

because they're durable and will last more than one year. 7 Plant assets are assets that will be used

for a number of years in the operation of a business. The first of these long-term assets is

Property/Plant/Equipment- Net Total. This asset is the book value of all capital equipment, or

original cost of the plant asset and property minus depreciation. Depreciation expense is the

portion of a plant asset’s cost that is transferred to an expense account in each fiscal period during a

plant asset’s useful life.

Sequentially listed are Goodwill- Net, Intangibles- Net, and then Long Term Investments.

Long-term investments are the sum of capital and plant, investments, and miscellaneous assets. The

final assets listed are Note Receivable- Long Term, Other Long Term Assets-Total, and finally

Other Assets- Total.

The account balances, or amount in these accounts, contribute to the Total Assets (the

sum of total current assets and total long-term assets) which were $848,942 million in 2009,

$1,112,225 million in 2008, $1,119,796 million in 2007 and $838,201 million in 2006. These total

figures show the steady increase of assets owned per year since 2006. This is with the exception of

the figures from 2008 to 2009 which was a period characteristically marked by a national economic

crisis.

6 "Term Definition: Balance Sheet." Business & Small Business. Web. 11 June 2010. <http://www.entrepreneur.com/encyclopedia/term/82186.html>.

7 "Term Definition: Balance Sheet." Business & Small Business. Web. 11 June 2010. <http://www.entrepreneur.com/encyclopedia/term/82186.html>.

The second section on the balance sheet is liabilities, which are amounts owed by a

business. Listed alongside liabilities is stockholder’s equity which is financial statement that shows

changes in a corporation’s ownership during a fiscal period. Liabilities are categorized as either

current or long term, just like assets. Current liabilities are debts that are due within one year. If

they are due in more than one year, they fall under the category of long-term liabilities. The initial

category of liabilities shows all of the short-term liabilities. The first account listed is Accounts

Payable which includes all expenses of a business which are due and payable. The next account is

Payable/Accrued and then Accrued Expenses which can be defined as all expenses required for

operation that have yet to be paid by the end of the fiscal period. These tend to be overhead and

salaries or the money paid for employee services. 8 Next is Notes Payable/Short Term Debt then

Current Port. of LT Debt/Capital Leases and lastly Other Current Liabilities- Total. The sum of

accounts payable, accrued expenses and taxes equal the Total Current Liabilities. From 2006 until

2009, the chart shows that Goldman Sachs has had a Total Current Liabilities number of zero for

each year.

The second subsection of liabilities demonstrates the long-term liabilities such as Total

Long Term Debt, Long Term Debt, Deferred Income Tax, Minority Interest and Other Liabilities-

Total. At the bottom of this second section is a section titled Total Liabilities, which is the sum of

current and long-term liabilities. The chart expresses that Goldman Sachs had a liabilities total of

$802,425 million in 2006, $1,076,996 million in 2007, $1,049,171 million in 2008 and $778,228

million in 2009. The amount owed in 2006 was significantly greater than in 2007, but this is also

when the company was prospering and therefore investing more money in various locations. The

total liabilities amount decreased drastically from 2008 to 2009, but this could be accredited to the

8 Term Definition: Balance Sheet." Business & Small Business. Web. 11 June 2010. <http://www.entrepreneur.com/encyclopedia/term/82186.html>.

downturn in the economy which would have inhibited the funds that Goldman Sachs had available

to spend.

The last aspect of the balance sheet is equity, which is the financial right to the assets of a

business. The account used to summarize the owner’s equity is called capital. On any given balance

sheet, the owner’s equity account (capital) equals the difference between total assets and total

liabilities. There are multiple operations of a business which can adversely affect owner’s equity. An

expense, for example, decreases owner’s equity due to the procedures associated with a business.

Another action that can decrease owner’s equity is a withdrawal, or assets taken out of a business

for the owner’s personal use.

Listed on this owner’s equity portion of the balance sheet are: Redeemable Preferred Stock,

Preferred Stock- Non-Redeemable- Net, Common Stock, Additional Paid-In Capital, and then

Retained Earnings (Accumulated Deficit). Retained earnings are the amount earned by a

corporation and not yet distributed to its stockholders; it is the account used to record a

corporation’s earnings. The last accounts listed are Treasury Stock-Common and Other Equity-

Total. The resulting amount of Total Equity is often the monetary number that investors and

analysts place their primary focus. For investors, the amount of owner’s equity can often help

discern the amount of money they feel they could comfortably invest without taking too much of a

risk. Listed below is the balance sheet ten-year summary for Goldman Sachs in order to view

historical figures which can help determine past or future trends.

Balance Sheet - 10 Year Summary (in Millions)

 

Current Assets

Current Liabilities

Long Term Debt

Shares Outstanding

12/09

848,942.0

778,228.0

196,288.0

515.1 Mil

12/08

1,112,225.0

1,049,171.0

203,977.0

442.6 Mil

11/08

884,547.0

820,178.0

185,678.0

442.5 Mil

11/07

1,119,796.0

1,076,996.0

197,474.0

390.7 Mil

11/06

838,201.0

802,415.0

148,976.0

412.7 Mil

11/05

706,804.0

678,802.0

100,007.0

437.2 Mil

11/04

531,379.0

506,300.0

80,696.0

481.0 Mil

11/03

403,799.0

382,167.0

57,482.0

473.0 Mil

11/02

355,574.0

336,571.0

38,711.0

472.9 Mil

11/01

312,218.0

293,987.0

31,016.0

476.2 Mil

Source: "GS Company Report, Financial Results, Key Ratios, Income Statement - MSN Money." Personal Finance and Investing - MSN Money. Web. 11

June 2010. <http://moneycentral.msn.com/companyreport?Symbol=GS>.

Income Statement

The second type of financial statement to analyze for Goldman Sachs is the income

statement. An income statement is a financial statement showing the revenue and expenses for a

fiscal period. Up-to-date income statement account balances are extended to the income statement

debit and credit columns.

Annual Income Statement

Financial data in U.S. Dollars Values in Millions (Except for per share items)

2009

2008

2008

2007

2006

Period End Date

12/31/2009

12/26/2008

11/28/2008

11/30/2007

11/24/2006

Period Length

12 Months

1 Months

12 Months

12 Months

12 Months

Stmt Source

10-K

10-Q

10-K

10-K

10-K

Stmt Source Date

03/01/2010

05/06/2009

01/27/2009

01/27/2009

01/27/2009

Stmt Update Type

Updated

Updated

Updated

Reclassified

Reclassified

 

Special

Revenue

51,673.0

1,185.0

53,579.0

87,968.0

69,353.0

Total Revenue

51,673.0

1,185.0

53,579.0

87,968.0

69,353.0

Cost of Revenue, Total

10,185.0

1,287.0

35,893.0

46,118.0

34,762.0

Gross Profit

41,488.0

-102.0

17,686.0

41,850.0

34,591.0

Selling/General/Administrative Expenses, Total

17,424.0

842.0

12,379.0

21,766.0

17,799.0

Research & Development

0.0

0.0

0.0

0.0

0.0

Depreciation/Amortization

1,734.0

111.0

1,262.0

819.0

694.0

Interest Expense (Income), Net Operating

0.0

0.0

0.0

0.0

0.0

Unusual Expense (Income)

61.0

0.0

0.0

0.0

0.0

Other Operating Expenses, Total

2,440.0

203.0

1,709.0

1,661.0

1,538.0

Operating Income

19,829.0

-1,258.0

2,336.0

17,604.0

14,560.0

Interest Income (Expense), Net Non-Operating

0.0

0.0

0.0

0.0

0.0

Gain (Loss) on Sale of Assets

0.0

0.0

0.0

0.0

0.0

Other, Net

0.0

0.0

0.0

0.0

0.0

Income Before Tax

19,829.0

-1,258.0

2,336.0

17,604.0

14,560.0

Income Tax - Total

6,444.0

-478.0

14.0

6,005.0

5,023.0

Income After Tax

13,385.0

-780.0

2,322.0

11,599.0

9,537.0

Minority Interest

0.0

0.0

0.0

0.0

0.0

Equity In Affiliates

0.0

0.0

0.0

0.0

0.0

U.S. GAAP Adjustment

0.0

0.0

0.0

0.0

0.0

Net Income Before Extra. Items

13,385.0

-780.0

2,322.0

11,599.0

9,537.0

Total Extraordinary Items

0.0

0.0

0.0

0.0

0.0

Net Income

13,385.0

-780.0

2,322.0

11,599.0

9,537.0

Total Adjustments to Net Income

Total Adjustments to Net Income

-1,193.0

-248.0

-281.0

-192.0

-139.0

Preferred Dividends

General Partners' Distributions

Basic Weighted Average Shares

512.3

485.5

437.0

433.0

449.0

Basic EPS Excluding Extraordinary Items

23.8

-2.12

4.67

26.34

20.93

Basic EPS Including Extraordinary Items

23.8

-2.12

4.67

26.34

20.93

Diluted Weighted Average Shares

550.9

485.5

456.2

461.2

477.4

Diluted EPS Excluding Extrordinary Items

22.13

-2.12

4.47

24.73

19.69

Diluted EPS Including Extraordinary Items

22.13

-2.12

4.47

24.73

19.69

Dividends per Share - Common Stock Primary Issue

1.05

0.47

1.4

1.4

1.3

Gross Dividends - Common Stock

588.0

233.0

642.0

639.0

615.0

Interest Expense, Supplemental

6,500.0

1,002.0

31,357.0

41,981.0

31,688.0

Depreciation, Supplemental

1,638.0

72.0

1,022.0

624.0

521.0

Normalized EBITDA

22,224.0

-1,147.0

3,873.0

18,423.0

15,254.0

Normalized EBIT

20,490.0

-1,258.0

2,611.0

17,604.0

14,560.0

Normalized Income Before Tax

20,490.0

-1,258.0

2,611.0

17,604.0

14,560.0

Normalized Income After Taxes

13,831.19

-780.0

2,595.35

11,599.0

9,537.0

Normalized Income Available to Common

12,638.19

-1,028.0

2,314.35

11,407.0

9,398.0

Basic Normalized EPS

24.67

-2.12

5.3

26.34

20.93

Diluted Normalized EPS

22.94

-2.12

5.07

24.73

19.69

Amortization of Intangibles

96.0

39.0

240.0

195.0

173.0

Source: "GS Company Report, Financial Results, Key Ratios, Income Statement - MSN Money." Personal Finance and Investing - MSN Money. Web. 11

June 2010. <http://moneycentral.msn.com/companyreport?Symbol=GS>.

The first account listed in the income statement above is revenue, or an increase in owner’s

equity resulting from the operation of a business. The second account listed is Gross Profit, or the

revenue remaining after cost of merchandise has been deducted. This includes Cost of Revenue-

Total. The third set of accounts displayed is Operating Income. Included under this section of

accounts

are:

Selling/General/Administrative

Expenses-

Total,

Research

&

Development,

Depreciation/Amortization,

Interest

Expense

(Income)

-

Net

Operating,

Unusual

Expense

(Income) and lastly, Other Operating Expenses- Total. The fourth section of accounts is Income

Before Tax which includes Interest Income (Expense) - Net Non-Operating, Gain (Loss) on Sale of

Assets and Other- Net. The fifth account is Income After Tax- Total and the sixth listed is Net

Income Before Extra, Items. The sixth and final account is Net Income, either including or

excluding extra items.

Net income is the difference between the total revenue and total expense

when total revenue is greater. The opposite of net income, and obviously less desirable, is net loss,

which is then total expense is greater, resulting in a loss. In 2006, the net income was $9,537 million

and in 2007 it was $11,599 million. In 2008, Goldman Sachs reported a net loss of $780 million.

Lastly, in 2009, the corporation recorded a net income of $13,385 million. Listed below is the

Income Statement ten-year summary which can exhibit the general trends of net income/loss for the

company for a greater length of time.

Income Statement - 10 Year Summary (in Millions)

 

Sales

EBIT

Depreciation

Total Net Income

EPS

Tax Rate (%)

12/09

51,673.0

19,829.0

1,734.0

13,385.0

22.13

32.5

12/08

1,185.0

-1,258.0

111.0

-780.0

-2.12

0.0

11/08

53,579.0

2,336.0

1,262.0

2,322.0

4.47

0.6

11/07

87,968.0

17,604.0

819.0

11,599.0

24.73

34.11

11/06

69,353.0

14,560.0

694.0

9,537.0

19.69

34.5

11/05

43,391.0

8,273.0

854.0

5,626.0

11.21

32.0

11/04

29,839.0

6,676.0

625.0

4,553.0

8.92

31.8

11/03

23,623.0

4,445.0

693.0

3,005.0

5.87

32.4

11/02

22,854.0

3,253.0

744.0

2,114.0

4.03

35.01

11/01

31,138.0

3,696.0

873.0

2,310.0

4.26

37.5

Financial data in U.S. Dollars Values in Millions (Except for per share items)

Source: "GS Company Report, Financial Results, Key Ratios, Income Statement - MSN Money." Personal Finance and Investing - MSN Money. Web. 11

June 2010. <http://moneycentral.msn.com/companyreport?Symbol=GS>.

STOCK INFORMATION

Displayed below is a stock quote and analysis for the Goldman Sachs Group, Inc. The graph

reveals the price history of Goldman Sachs (GS) stock from the 11 th of June, 2009 to the 10 th of

June, 2010.

Price History of Goldman Sachs Stock Shares:

The price per share varies throughout that span of time. The price, however, remained in

The price per share varies throughout that span of time. The price, however, remained in the range

of $140 per share to $180, yet never dropping below the $140 mark.

The Stock Activity chart below shows that the last recorded price as of June 10 th , 2010 was

$133.77 per share. The fifty-two week high was an astonishing $193.60. The fifty-two week low was

$131.30.

Stock Activity for Goldman Sachs:

Last Price

133.77

52

Week High

193.60

52

Week Low

131.30

Volume

NA

Average Daily

17.91 Mil

Volume

(13wk)

50

Day Moving

153.83

Average 200 Day Moving

165.85

Average Volatility (beta)

1.39

This high-to-low range is relatively mild for a corporation who has had such a high price

fluctuation on an already expensive share of stock. A share of stock is each unit of ownership in a

corporation such as Goldman Sachs and an owner of one or more of these shares is a stockholder.

The Stock Price History chart below is defined by Change which is Relative to its Strength.

Stock Price History

Change

Relative Strength

Last 3 Months

-20.4%

24

Last 6 Months

-17.8%

24

Last 12 Months

-8.4%

32

In the last three months, the price dropped 20.4% and its strength recorded as 24. In the last six

months, the price has dropped a total of 17.8% with its strength remaining at 24. Finally, in the last

twelve months, or one year, the price has dropped 8.4% with strength of 32. This chart puts the

price changes of the shares of stock into perspective. Although the last three and six months have a

high rate of price per share decrease around 20%, the entire year’s price drop was only around eight

percent.

The Financial overview chart is listed below. The categories are identified by the twelve

months as relative to five-year growth.

 

Financials Last 12 Months

5 Year Growth

Sales

54.2 Bil

11.6%

Income

13.8 Bil

21.8%

Dividend Rate

1.40

0.98%

Dividend Yield

1.02%

NA

Sales for the last year is reported as $54.2 and thus an 11.6% five-year growth. Income was recorded

as $13.8 billion and therefore 21.8% of growth in the last five years.

The Fundamental Data chart shown below delineates some key financial pieces to examine.

Fundamental Data

Debt/Equity Ratio

3.85

Gross Margin

82.66%

Net Profit Margin

27.75%

Total Shares Outstanding

514.8 Mil

Market Capitalization

68.86 Bil

Earnings/Share 23.97

The Gross Margin is 82.66% and the Net Profit Margin is 27.75%. The Total number of Shares

Outstanding is $514.8 million, thus leaving that amount of shares to be purchased by pre-existing or

potential shareholders. Market Capitalization is reported as $68.86 billion which manifests the

profitability of the stock. Lastly, the Earnings per Share is $23.97 which further shows the prosperity

of Goldman Sachs stock.

The Brokerage Recommendation graph displayed below reveals the level and rate of

recommendation placed on Goldman Sachs stock to investors.

recommendation placed on Goldman Sachs stock to investors. The current Zacks average brokerage recommendation status is

The current Zacks average brokerage recommendation status is “Moderate Buy”.

The Analyst Ratings chart seen below has a column for the levels of recommendation

varying from strong buy to strong sell, the current recommendation, as well as the recommendations

given for one, two and three months ago.

Recommendations

Current

Analyst Ratings 1 Month

Ago

2 Months Ago

3 Months Ago

Strong Buy

10

10

11

14

Moderate Buy

1

1

3

3

Hold

8

8

4

4

Moderate Sell

0

0

0

0

Strong Sell

0

0

0

0

Mean Rec.

1.89

1.89

1.61

Mean Recommendation Conversion Table

1.0

=

Strong Buy

1.1

thru 2.0 =

Moderate Buy

2.1

thru 3.0 =

Hold

3.1

thru 4.0 =

Moderate Sell

4.1

thru 5.0 =

Strong Sell

1.52

The current mean recommendation is 1.89 which is classified as a “moderate buy” as seen when

consulting the Mean Recommendation Conversion Table located at the bottom of the chart. The

1.89 qualifies the stock as a moderate buy recommendation, but is encroaching on the 2.1 mark. The

2.1 through 3.0 recommendation rating is the “hold” category which is far less desirable than the

moderate buy. This is because the hold rating may discourage new investors from buying and more

importantly, influence current stockholders to hold on to their current amount of shares and choose

not to buy more. The same 1.89 figure is seen for one month ago. Two months ago, however, the

mean recommendation was 1.61 which is still a falls under the “moderate buy” category, but is far

less than 1.89 and is closer to the “strong buy” classification. Three months ago, a 1.52 rating is

shown, which is the best one displayed.

Works Cited

"Goldman Sachs Group: Company Profile." Datamonitor. 9 Apr. 2010. Web.

"GOLDMAN SACHS GROUP INC (GS: US): Financial Statements - BusinessWeek." Investing & Stock Research by Company and Industry - BusinessWeek. Web. 11 June 2010. <http://investing.businessweek.com/research/stocks/financials/financials.asp?ticker=GS:US>.

"Goldman Sachs Group." World, US, China, India Economy, Investment, Finance, Credit Cards | Economy Watch. Web. 11 June 2010. <http://www.economywatch.com/companies/forbes-list/usa/goldman-sachs- group.html>.

"GS Company Report, Financial Results, Key Ratios, Income Statement - MSN Money." Personal Finance and Investing - MSN Money. Web. 11 June 2010. <http://moneycentral.msn.com/companyreport?Symbol=GS>.

"GS: GOLDMAN SACHS GROUP INC Balance Sheet." Business News, Stock Quotes, Investment Advice - DailyFinance. Web. 11 June 2010. <http://www.dailyfinance.com/financials/the-goldman-sachs- group-inc/gs/nys/balance-sheet>.

"GS: Income Statement for Goldman Sachs Group, Inc. (The) - Yahoo! Finance." Yahoo! Finance - Business Finance, Stock Market, Quotes, News. Web. 11 June 2010. <http://finance.yahoo.com/q/is?s=gs&annual>.

"GS: Profile for Goldman Sachs Group, Inc. (The) - Yahoo! Finance." Yahoo! Finance - Business Finance, Stock Market, Quotes, News. Web. 11 June 2010. <http://finance.yahoo.com/q/pr?s=GS Profile>.

"Promissory note." Encyclopedia Britannica. 2010. Encyclopedia Britannica Online. 11 Jun. 2010

"Term Definition: Balance Sheet." Business & Small Business. Web. 11 June 2010.

<http://www.entrepreneur.com/encyclopedia/term/82186.html>.

"THE USES OF FINANCIAL STATEMENTS." BEN BEST's HOME PAGE. Web. 11 June 2010. <http://www.benbest.com/business/finance.html>.

APPENDIX A:

Company Profile and Key Statistics

The Goldman Sachs Group, Inc. (GS) On Jun 10: 133.77 0.00 (0.00%)
The Goldman Sachs Group, Inc. (GS)
On Jun 10: 133.77 0.00 (0.00%)

Profile

The Goldman Sachs Group, Inc. 200 West Street New York, NY 10282 United States - Map Phone: 212-902-1000 Fax: 212-902-3000 Website: http://www2.goldmansachs.com

DETAILS

Index Membership:

Full Time Employees:

BUSINESS SUMMARY

38,500

The Goldman Sachs Group, Inc., together with its subsidiaries, provides investment banking, securities, and investment management services to corporations, financial institutions, governments, and high-net-worth individuals worldwide. Its Investment Banking segment offers financial advisory services, including advisory assignments with respect to mergers and acquisitions, divestitures, corporate defense activities, restructurings, and spin-offs; and underwriting services, such as equity underwriting and debt underwriting. The company€™s Trading and Principal Investments segment engages in market making in, trading of, and investing in commodities and commodity derivatives, including power generation and related activities; credit products, such as credit derivatives, investment-grade corporate securities, high-yield securities, bank and secured loans, municipal securities, emerging market and distressed debt, public and private

CORPORATE GOVERNANCE

The Goldman Sachs Group, Inc.&apos;s Corporate Governance Quotient (CGQ®) as of Jun 1, 2010 is better than 44.5% of S&P 500 companies and 85.7% of Diversified Financials companies.

KEY EXECUTIVES

Mr. Lloyd C. Blankfein , 55

Pay

Exercised

Chairman, Chief Exec. Officer and Member

$600.00K

$0.00

of Management Committee

Mr. Gary D. Cohn , 49

Pres, Chief Operating Officer, Director and

$600.00K

$0.00

Member of Management Committee

Mr. David A. Viniar , 54

Chief Financial Officer, Exec. VP and

$600.00K

$0.00

Member of Management Committee

Mr. John S. Weinberg , 53

Vice Chairman, Co-Head of the

Investment Banking Division, Member of

$600.00K

$0.00

Management Committee and Member of

Bus. Standards Committee

Mr. J. Michael Evans , 52

Vice Chairman, Co-Chairman of Bus.

Standards Committee, Member of

$600.00K

$0.00

Management Committee and Chairman of

Asia Operations

equity securities, and real estate; currencies and currency derivatives; interest rate products consisting of interest rate derivatives and global government securities; money market instruments, including matched book positions; and mortgage- related securities and loan products, and other asset-backed instruments. This segment also provides equity securities and derivatives; equities and options exchange-based market-making services; securities, futures, and options clearing services; and insurance services, as well as involves in principal investments activities. The company€™s Asset Management and Securities Services segment offers asset management services comprising investment advisory services, financial planning, and investment products; management of merchant banking funds; and securities services, such as prime brokerage, financing services, and securities lending. The Goldman Sachs Group also provides global investment research services. The company was founded in 1869 and is headquartered in New York, New York.

Dollar amounts are as of Dec 31, 2009 and compensation values

are for the last fiscal year ending on that date. Pay is salary,

bonuses, etc. Exercised is the value of options exercised during

the fiscal year.

Source: "GS: Profile for Goldman Sachs Group, Inc. (The) - Yahoo! Finance." Yahoo! Finance - Business Finance, Stock Market, Quotes, News. Web. 11

June 2010. <http://finance.yahoo.com/q/pr?s=GS Profile>.

APPENDIX B:

Annual Cash Flow: Goldman Sachs

FINANCIAL STATEMENTS FOR GOLDMAN SACHS GROUP INC (GS)

Annual
Annual
FINANCIAL STATEMENTS FOR GOLDMAN SACHS GROUP INC (GS) Annual Currency in Millions of U.S. Dollars As

Currency in Millions of U.S. Dollars

As of:

Nov 24

Nov 30

Nov 28

Dec 31

4-Year

2006

2007

2008

2009

Trend

 

Restated

Restated

Reclassified

NET INCOME

9,537.0

11,599.0

2,322.0

13,385.0

Depreciation & Amortization

749.0

1,167.0

1,385.0

1,247.0

Amortization of Goodwill and Intangible Assets

246.0

--

240.0

96.0

DEPRECIATION & AMORTIZATION, TOTAL

995.0

1,167.0

1,625.0

1,343.0

Asset Writedown & Restructuring Costs

--

--

--

600.0

Other Operating Activities

-1,505.0

129.0

-1,763.0

-431.0

Change in Accounts Receivable

-1,794.0

-3,811.0

-6,587.0

6,265.0

Change in Accounts Payable

9,823.0

53,857.0

-50.0

-47,414.0

Change in Other Working Capital

-73,157.0

-136,853.0

4,736.0

73,118.0

CASH FROM OPERATIONS

-52,447.0

-69,447.0

1,894.0

48,875.0

Capital Expenditure

-1,744.0

-2,130.0

-2,027.0

-1,556.0

Sale of Property, Plant, and Equipment

69.0

93.0

121.0

82.0

Cash Acquisitions

-1,661.0

-1,900.0

-2,613.0

-221.0

Investments in Marketable & Equity Securities

-6,412.0

4,333.0

182.0

134.0

CASH FROM INVESTING

-9,748.0

396.0

-4,337.0

-1,561.0

Short-Term Debt Issued

16,856.0

15,042.0

--

--

Long-Term Debt Issued

63,290.0

79,219.0

50,267.0

30,130.0

TOTAL DEBT ISSUED

80,146.0

94,261.0

50,267.0

30,130.0

Short Term Debt Repaid

-4,031.0

--

-28,022.0

-20,241.0

Long Term Debt Repaid

-20,930.0

-22,178.0

-46,232.0

-35,685.0

TOTAL DEBT REPAID

-24,961.0

-22,178.0

-74,254.0

-55,926.0

Issuance of Common Stock

1,613.0

791.0

6,105.0

6,260.0

Repurchase of Common Stock

-7,817.0

-8,956.0

-2,034.0

-2.0

Common Dividends Paid

-615.0

-639.0

-642.0

--

Preferred Dividends Paid

-139.0

-192.0

-208.0

--

Common and/or Preferred Dividends Paid

--

--

--

-2,205.0

TOTAL DIVIDEND PAID

-754.0

-831.0

-850.0

-2,205.0

Other Financing Activities

14,518.0

10,303.0

15,301.0

8,489.0

CASH FROM FINANCING

64,094.0

73,390.0

7,901.0

-22,828.0

NET CHANGE IN CASH

1,899.0

4,339.0

5,458.0

24,486.0

Source: "GOLDMAN SACHS GROUP INC (GS:US): Financial Statements - BusinessWeek." Investing & Stock Research by Company and Industry -

BusinessWeek. Web. 11 June 2010. <http://investing.businessweek.com/research/stocks/financials/financials.asp?ticker=GS:US>.

APPENDIX C:

Additional Stock Chart References

Splits: none

Splits: none

Last Trade:

133.77

Day's Range:

N/A - N/A

Trade Time:

Jun 10

52wk Range:

131.30 - 193.60

Change:

0.00 (0.00%)

Volume:

0

Prev Close:

133.77

Avg Vol (3m):

17,892,900

Open:

N/A

Market Cap:

68.86B

Bid:

133.67

x 500

P/E (ttm):

5.57

Ask:

134.50

x 500

EPS (ttm):

24.01

1y Target Est:

201.06

Div & Yield:

1.40 (1.00%)