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In: Accounting
harles Schwab Corporation is one of the more innovative brokerage and financial service companies in the...
harles Schwab Corporation is one of the more innovative brokerage and financial service companies in the United States. The company recently provided information about its major business segments as follows (in millions):
| Investor Services | Advisor Services | |
| Revenues | $3,219 | $1,514 |
| Income from operations | 875 | 523 |
| Depreciation | 153 | 53 |
| Required: | |
| A. | How does a brokerage company like Schwab define the Investor Services and Advisor Services segments? Use the Internet and the Business Connection box in this chapter to develop your answer. |
| B. | Provide a specific example of a variable and fixed cost in the Investor Services segment. |
| C. | Estimate the contribution margin for each segment, assuming that depreciation represents the majority of fixed costs. |
| D. | If Schwab decided to sell its Advisor Services business to another company, estimate how much operating income would decline. |
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Charles Schwab Corporation is one of the more innovative brokerage and financial service companies in the...
Charles Schwab Corporation is one of the more
innovative brokerage and financial service companies in the United
States. The company recently provided information about its major
business segments as follows (in millions):
Investor
Services
Advisor
Services
Revenues
$2,910
$1,603
Income from operations
1,044
179
Depreciation
101
62
a. The Investor Services segment
serves the retail customer, you and me. These include brokerage,
Internet, and mutual fund services. The Advisor
Services segment includes the same services provided for
financial institutions, such as banks,...
Charles Schwab Corporation (SCHW) is one of the more innovative brokerage and financial service companies in...
Charles Schwab Corporation (SCHW) is one of the
more innovative brokerage and financial service companies in the
United States. The company recently provided information about its
major business segments as follows (in millions):
Investor
Services
Advisor
Services
Revenues
$5,411
$2,067
Operating income
2,031
962
Depreciation
180
54
a. The Investor Services segment
serves the retail customer, you and me. These are the brokerage,
Internet, and mutual fund services used by individual Investors.
The Advisor Services segment includes the same services
provided for...
Charles Schwab Corporation is one of the more innovative brokerage and financial service companies in the United States
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Investor(Retail)Services
AdvisorServices
Revenues
$7,321
$2,811
Operating income before taxes
3,176
1,386
Depreciation and amortization
186
120
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Segment Analysis for a Service Company Charles Schwab Corporation is one of the more innovative brokerage...
Segment Analysis for a Service Company
Charles Schwab Corporation is one of the more
innovative brokerage and financial service companies in the United
States. The company recently provided information about its major
business segments as follows (in millions):
Investor
Services
Advisor
Services
Revenues
$2,680
$1,393
Income from operations
1,022
172
Depreciation
101
69
a. The segment serves the
retail customer, you and me. These include brokerage, Internet, and
mutual fund services. The segment includes the
same services provided for financial institutions, such...
Segment analysis for a service company Charles Schwab Corporation (SCHW) is one of the more innovative...
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Charles Schwab Corporation (SCHW) is one of the
more innovative brokerage and financial service companies in the
United States. The company recently provided information about its
major business segments as follows (in millions):
Investor
Services
Advisor
Services
Revenues
$5,411
$2,067
Operating income
2,031
962
Depreciation
180
54
a. The investor services/advisor
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These are the brokerage, Internet, and mutual fund services used by
individual Investors. The...
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banks, mutual fund managers, insurance companies, and pension plan...
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Segment Analysis
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Revenues
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Income from operations
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Depreciation
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56
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Brokerage
Speed
Satisfaction
Scottrade, Inc.
3.5
3.3
Charles Schwab
3.5
3.3
Fidelity Brokerage Services
3.8
3.2
TD Ameritrade
3.7
3.7
E*Trade Financial
3.0
3.2
Vanguard Brokerage Services
2.8
3.6
USAA Brokerage Services
3.5
3.7
Thinkorswim
2.6
2.6
Wells Fargo Investments
2.2
2.6
Interactive Brokers
4.0
4.0
Zecco.com
2.3
2.3
Develop the least squares estimated regression
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Suppose Wells Fargo Investments developed new software to
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Brokerage
Trade Price
Speed of Execution
Satisfaction Electronic Trades
Scottrade, Inc.
3.4
3.4
3.5
Charles Schwab
3.2
3.3
3.4
Fidelity Brokerage Services
3.1
3.4
3.9
TD Ameritrade
2.9
3.6
3.7
E*Trade Financial
2.9
3.2
2.9
(Not listed)
2.5
3.2
2.7
Vanguard Brokerage Services
2.6
3.8
2.8
USAA Brokerage Services
2.4
3.8
3.6
Thinkorswim
2.6
2.6
2.6
Wells Fargo Investments
2.3
2.7
2.3
Interactive Brokers
3.7
4
4
Zecco.com
2.5
2.5
2.5
Firstrade Securities
3
3
4
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