Specifically, Smith wishes to evaluate the impact of each of the off$-$balance$-$sheet items on each of the ratios found in Table $2.$ Assume that the "loan proceeds" from the financed receivables would be invested at interest rate of $8$ percent.

Calculate the combined effect of the three off$-$balance$-$sheet items in Table $3$ on each of the following three financial ratios shown in Table $2.$ Do not round intermediate calculations. Round your answers to four decimal places.

EBITDA$/$interest expense:

Long$-$term debt$/$equity:

Current assets$/$current liabilities:

The bond is currently trading at a credit spread of $56$ basis points. Evaluate whether this credit yield premium incorporates the effect of the off$-$balance$-$sheet items. State and justify whether the current credit spread compensates Smith for the credit risk of the bond, based on the internal bond$-$rating criteria found in the firm's internal bond$-$rating criteria. Round your answers to the nearest whole number.

Credit Yield Premium

over U$.$S$.$ Treasuries

Bond Rating $($in Basis Points$)$

Interest Coverage

$-$Select$-$

Leverage

$-$Select$-$

Current Ratio

$-$Select$-$

The current $"$A$"$ rating of the Montrose bond

$-$Select$-$

the effect of the off$-$balance$-$sheet items, and the current credit yield premium of $56$ basis points

$-$Select$-$

sufficient to compensate Smith for the credit risk of the bond.