EX-12.1 3 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
June 30,		    Six Months Ended
June 30,
     2008    2007    2008    2007

Earnings from continuing operations before taxes on earnings

    $ 514    $ 424    $ 1,022    $ 815

Fixed charges

            

Interest expense:

            

Deposits from banking clients

      21      63      57      122

Payables to brokerage clients

      9      89      44      185

Long-term debt

      15      7      30      14

Other

      6      5      11      10
                           

Total

      51      164      142      331

Interest portion of rental expense

      15      14      31      29
                           

Total fixed charges (A)

      66      178      173      360
                           

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

    $ 580    $ 602    $     1,195    $     1,175
                           

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

      8.8      3.4      6.9      3.3
                           

Ratio of earnings to fixed charges excluding deposits from banking clients and payables to brokerage clients interest expense (2)

      15.3      17.3      15.2      16.4
                           

 

(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 deposits from banking clients and payables to brokerage 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 deposits from banking clients and payables to brokerage clients interest expense reflects the elimination of such interest expense as a fixed charge.