Using the reported data the leverage measure is 0.50 ((150 + 100) / (150 + 100 + 250)) and times interest earned is 4 times (88 / 22). Following the capitalization of the operating leases the balance sheet values are:

Total assets	$710 million	(500 assets + 240 leases - 30 depreciation on leases)
Value of operating leases	$210 million	(increase in financing liabilities)
Long-term debt	$150 million	unchanged
Capital lease obligations	$100 million	unchanged
Total equity	$250 million	unchanged

Therefore, the leverage measure is 0.65 ((210 + 150 + 100) / (210 + 150 + 100 +250)).

The income statement is affected in the following way:

reported EBIT	88
+ rent expense	23
= EBIT excluding cost of operating leases	111
- depreciation of operating leases	30	($240 million/8 years)
= adjusted EBIT	81

Interest expense will increase by $24 million ($240 million × 0.10) to $46 million. Therefore times interest earned decreases to 1.76 times (81 / 46). Recall that when capitalizing operating leases interest expense is calculated as the present value of the lease obligations multiplied by implied interest rate.