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
March 31,
     2008    2007

Earnings from continuing operations before taxes on earnings

    $ 508    $ 391

Fixed charges

      

Interest expense:

      

Deposits from banking clients

      36      59

Payables to brokerage clients

      35      96

Long-term debt

      15      7

Other

      5      5
             

Total

      91      167

Interest portion of rental expense

      16      15
             

Total fixed charges (A)

      107      182
             

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

    $ 615    $ 573
             

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

      5.7      3.1
             

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

      15.1      15.5
             

 

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