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For the first in our “How-To Use I-Metrix” series, we challenged our Senior Analyst Elias-John Kies to find toxic assets in the reported financials of some of the companies leading the financial services meltdown.

It was very difficult to derive the extent of toxic assets that the brokers held due to some of the limited SEC disclosure requirements, said Kies. However, by analyzing the main financial statements Kies came up with a very interesting view of the various degrees of reliance on the Repo market (short-term financing) by the brokers over time.

Here’s his spreadsheet representing the exposure to repos as a percentage of total liabilities. Companies viewed are Lehman, Merrill Lynch, Bear Stearns, Goldman Sachs, and Morgan Stanley.

“These companies have incentive to use the shorter term financing due to its low interest cost and therefore better spread,” explains Kies, “though this carries a risk when credit markets seize as they have—not that any of the corporate models forecasted a halt to the system at this velocity.” Goldman Sachs and Morgan Stanley reduced their reliance on this shorter term financing while the extinct entities were still in the 20% range or higher.

Obviously, this is just one of the pieces of the puzzle. Kies suggests combing this with the toxic exposures, the rapid decline in business versus potential fixed labor costs (negative operating leverage) and other factors. The granular fundamental database from I-Metrix allows for this type of analysis. The repos line item is just one of the over 6000 data points available in I-Metrix.

You can email Elias-John Kies at ekies@edgar-online.com or call him for more details about using I-Metrix at: (212) 457-8213.