EX-12 2 c06786exv12.htm STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES exv12
 

HSBC Finance Corporation
 
EXHIBIT 12
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
                   
    Six months ended
    June 30,
     
    2006   2005
 
    (dollars are in
    millions)
Net income
   $ 1,456     $ 1,098  
Income tax expense
     840       555  
             
Income before income tax expense
     2,296       1,653  
             
Fixed charges:
                
 
Interest expense
     3,385       2,166  
 
Interest portion of rentals(1)
     29       30  
             
Total fixed charges
     3,414       2,196  
             
Total earnings as defined
   $ 5,710     $ 3,849  
             
Ratio of earnings to fixed charges
     1.67       1.75  
Preferred stock dividends(2)
     29       55  
Ratio of earnings to combined fixed charges and preferred stock dividends
     1.66       1.71  
 
(1)  Represents one-third of rentals, which approximates the portion representing interest.
 
(2)  Preferred stock dividends are grossed up to their pretax equivalents.