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. $ millions Total liabilities Equity Operating lease liabilities (not included on balance sheet) EBIT* Interest expense* Operating lease interest included in selling, general, & admin (rent expense)* Feb. 2, 2019 Feb. 3, 2018 $29,993 $28,652 11,297 11,651 2,170 2,072 4,137 4,283 461 641 83 79 *Adjusted for a 53rd week in year ended February 3, 2018 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). 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 Liabilities to equity 2.65 2.46 Times interest earned 8.97 6.68 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 2.65 2.46 2. Does the adjustment make a material difference in the ratio? Lease adjustment does not materially impact overall leverage assessment 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). FY 2019 FY 2018 Times interest earned 8.97 6.68 2. Does the adjustment make a material difference in the ratio? Lease adjustment does not materially impact overall leverage assessment