EX-12.1 5 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,		  
     2010      2009         2010           2009    

Earnings before taxes on earnings

    $     199       $     320       $     550       $  1,010   

Fixed charges

            

Interest expense excluding provision for credit losses:

            

Deposits from banking clients

      29         32         85         73   

Payables to brokerage clients

      1         —         2         2   

Long-term debt

      25         22         64         51   

Other

      —         1         —         2   
                                   

Total

      55         55         151         128   

Interest portion of rental expense

      14         13         42         56   
                                   

Total fixed charges (A)

      69         68         193         184   
                                   

Earnings before taxes on earnings and fixed charges (B)

    $ 268       $ 388       $ 743       $ 1,194   
                                   

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

      3.9         5.7         3.8         6.5   

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

      6.1         9.9         6.2         10.3   

 

(1)

The ratio of earnings to fixed charges is calculated in accordance with SEC requirements. For such purposes, “earnings” consist of earnings before taxes on earnings and fixed charges. “Fixed charges” consist of interest expense as listed above, and 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.