EX-12.1 4 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)

 

Year Ended December 31,

    2010      2009      2008      2007      2006  

Earnings from continuing operations before taxes on earnings

    $ 779       $ 1,276       $ 2,028       $ 1,853       $ 1,476   

Fixed charges

               

Interest expense:

               

Deposits from banking clients

      105         107         104         238         200   

Payables to brokerage clients

      2         3         55         329         426   

Short-term borrowings

      —         —         1         —         —   

Long-term debt

      92         71         59         38         29   

Other

      —         2         7         15         23   
                                            

Total

      199         183         226         620         678   

Interest portion of rental expense

      56         71         62         60         55   
                                            

Total fixed charges (A)

      255         254         288         680         733   
                                            

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

    $ 1,034       $ 1,530       $ 2,316       $ 2,533       $ 2,209   
                                            

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

      4.1         6.0         8.0         3.7         3.0   

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

      6.3         9.9         16.7         17.4         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, 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.