Adjusting Financial Information Prior to Credit Analysis Target reports the following financial information in its form 10-K dated February 2, 2019, Note: Target had not yet adopted the new lease standard. Total liabilities Equity Operating lease liabilities (not included on balance sheet) EBIT Interest expense* Operating lease interest included in selling, general, & admin (rent expense)* *Adjusted for a 53rd week in year ended February 3, 2018 $ millions Liabilities to equity Times interest earned Required a. Compute Liabilities to equity and Times interest earned for both years. Note: Round your answers to two decimal places (for example, enter 7.65 for 7.645555) FY 2019 FY 2018 b. 1. Before calculating solvency ratios, credit rating agencies routinely adjust total liabilities by adding operating lease liabilities. Adjust Target's total liabilities and recalculate the liabilities to equity ratio. Note: Round your answers to two decimal places (for example, enter 7.65 for 7.645555). FY 2019 FY 2018 Liabilities to equity 2. Does the adjustment make a material difference in the ratio? Times Interest earned Check C 1. Before calculating coverage ratios, credit rating agencies routinely adjust interest expense by adding operating lease interest. Adjust Target's interest expense and recalculate the times interest earned ratio. Note: Round your answers to two decimal places (for example, enter 7.65 for 7,645555). Feb. 2, 2019 Feb. 3, 2018 $31,193 $29,798 11,297 11,651 2,257 2,155 4,137 4,283 479 667 86 82 FY 2019 FY 2018 2. Does the adjustment make a material difference in the ratio?

Adjusting Pinencial Infermstion Frior to Credit Analvis Nequired a. Compute Lathicies to equey and Times interest earned for bos years secevired a. Cempute Labilent to equity and tiries inereat earneat for both years