EX-12.1 10 d264447dex121.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,

    2011      2010      2009      2008      2007  

Earnings from continuing operations before taxes on earnings

    $ 1,392       $ 779       $ 1,276       $ 2,028       $ 1,853   

Fixed charges

               

Interest expense:

               

Deposits from banking clients

      62         105         107         104         238   

Payables to brokerage clients

      3         2         3         55         329   

Short-term borrowings

      —         —         —         1         —   

Long-term debt

      108         92         71         59         38   

Other

      2         —         2         7         15   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

      175         199         183         226         620   

Interest portion of rental expense

      62         56         71         62         60   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total fixed charges (A)

      237         255         254         288         680   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

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

    $ 1,629       $ 1,034       $ 1,530       $ 2,316       $ 2,533   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

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

      6.9         4.1         6.0         8.0         3.7   

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

      9.1         6.3         9.9         16.7         17.4   

 

(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.