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)

 

     Three Months Ended
June 30,		      Six Months Ended
June 30,		  
     2011      2010      2011      2010  

Earnings before taxes on earnings

    $ 386       $ 338       $ 780       $ 351   
  

 

 

     

 

 

     

 

 

     

 

 

  

Fixed charges

            

Interest expense :

            

Deposits from banking clients

      16         25         33         56   

Payables to brokerage clients

      —         1         1         1   

Long-term debt

      27         19         54         39   

Other

      2         —         2         —   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

      45         45         90         96   

Interest portion of rental expense

      15         14         30         28   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total fixed charges (A)

      60         59         120         124   
  

 

 

     

 

 

     

 

 

     

 

 

  

Earnings before taxes on earnings and fixed charges (B)

    $ 446       $ 397       $ 900       $ 475   
  

 

 

     

 

 

     

 

 

     

 

 

  

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

      7.4         6.7         7.5         3.8   

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

      9.8         11.2         10.1         6.2   

 

(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.