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EBIT FFO Interest expense Total debt Total capital York, Inc. $550 $300 $40 $1,000 $4,000 Zale, Inc. $2,250 $850 $160 $2,500 $6,500 Industry Average $1,400

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EBIT FFO Interest expense Total debt Total capital York, Inc. $550 $300 $40 $1,000 $4,000 Zale, Inc. $2,250 $850 $160 $2,500 $6,500 Industry Average $1,400 $600 $100 $2,400 $6,000 Suppose that York has goodwill of $700 and operating lease obligations with a present value of $1000. Suppose that Zale has a net pension liability of $500 and no operating leases. Adjusting for all obligations, Zale's Debt/Capital equals approximately indicating that it is creditworthy than York based solely on the Debt/Capital ratio. (You also need to calculate York's Debt/Capital to answer the question) 46%; less 46%; more 41.5%; less 41.5%; more

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