EX-12.1 7 dex121.htm COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES Computation of Ratio of Earnings to Fixed Charges

THE CHARLES SCHWAB CORPORATION

Exhibit 12.1

Computation of Ratio of Earnings to Fixed Charges

(Dollar amounts in millions)

(Unaudited)

 

     Three Months Ended
September 30,		    Nine Months Ended
September 30,
     2007    2006    2007    2006

Earnings from continuing operations before taxes on earnings

    $ 512    $ 382    $ 1,327    $ 1,104

Fixed charges

            

Interest expense:

            

Brokerage client cash balances

      84      109      269      325

Deposits from banking clients

      65      61      187      138

Long-term debt

      7      7      21      22

Other

      4      6      14      17
                           

Total

      160      183      491      502

Interest portion of rental expense

      15      14      44      41
                           

Total fixed charges (A)

      175      197      535      543
                           

Earnings from continuing operations before taxes on earnings and fixed charges (B) 

    $ 687    $ 579    $ 1,862    $ 1,647
                           
           

Ratio of earnings to fixed charges (B) ÷ (A) (1)

      3.9      2.9      3.5      3.0
                           

Ratio of earnings to fixed charges excluding brokerage and banking client interest expense (2)

      20.7      15.1      17.8      14.8
                           

(1)

The ratio of earnings to fixed charges is calculated in accordance with SEC requirements. For such purposes, “earnings” consist of earnings from continuing operations before taxes on earnings and fixed charges. “Fixed charges” consist of interest expense as listed above, including one-third of rental expense, which is estimated to be representative of the interest factor.

 

(2)

Because interest expense incurred in connection with both payables to brokerage clients and deposits from banking clients is completely offset by interest revenue on related investments and loans, the Company considers such interest to be an operating expense. Accordingly, the ratio of earnings to fixed charges excluding brokerage and banking client interest expense reflects the elimination of such interest expense as a fixed charge.