EX-12 2 c14804exv12.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
 
                 
Three months ended March 31,   2007     2006  
   
    (dollars are in millions)  
 
Net income
  $ 541     $ 888  
Income tax expense
    332       511  
                 
Income before income tax expense
    873       1,399  
                 
Fixed charges:
               
Interest expense
    2,071       1,623  
Interest portion of rentals(1)
    18       16  
                 
Total fixed charges
    2,089       1,639  
                 
Total earnings as defined
  $ 2,962     $ 3,038  
                 
Ratio of earnings to fixed charges
    1.42       1.85  
Preferred stock dividends(2)
    15       14  
Ratio of earnings to combined fixed charges and preferred stock dividends
    1.41       1.84  
 
 
(1) Represents one-third of rentals, which approximates the portion representing interest.
 
(2) Preferred stock dividends are grossed up to their pretax equivalents.