Fitch's 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 8x 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, Kohl's reports the following amounts. Note: Kohl's had not yet adopted the new lease standard. Liabilities Total debt $ millions Feb. 2, 2019 Feb. 3, 2018 $7,150 $8,209 3,604 4,649 Equity 5,527 5,419 Cash from operations 2,107 1,691 Operating lease payments (annual) 310 302 Required a. Why would Fitch make this sort of adjustment prior to calculating credit-risk ratios? b. Compute Liabilities to equity and Cash from operations to debt for both years using the numbers as reported by Kohl's. Note: Round your answers to two decimal places (for example, enter 7.65 for 7.645555). Liabilities to equity Cash from operations to debt FY 2019 FY 2018 0 0 0 0 c. Adjust Kohl's total liabilities and debt for the 8x multiple and recalculate both ratios. Note: Round your answers to two decimal places (for example, enter 7.65 for 7.645555). Liabilities to equity Cash from operations to debt FY 2019 FY 2018 0 0 0 0 Does the adjustment make a material difference for these ratios