Adjusting for Off-Balance Sheet Liabilities Fitchs current analytical approach views operating leases as a debt-like form of funding and their analysts adjust core leverage and coverage ratios using a multiple to create a debt-equivalent for all companies that have not yet adopted the new lease standard. Fitch believes a standard 8 multiple is appropriate for assets with a long economic life, such as property leases. Specifically, Fitch multiplies the annual operating lease payments by 8 and adds that amount to debt prior to calculating ratios. In its 2018 annual report, Kohls reports the following amounts. Note: Kohls had not yet adopted the new lease standard.

$ millions	Feb. 2, 2019	Feb. 3, 2018
Liabilities	$6,942	$7,970
Total debt	3,499	4,514
Equity	5,527	5,419
Cash from operations	2,107	1,691
Operating lease payments (annual)	301	293