The Gap Inc. is a global specialty retailer operating stores selling casual apparel, personal care, and other accessories for men, women, and children under The Gap, Banana Republic, and Old Navy brands. The Gap Inc. designs virtually all of its products, which are manufactured by independent sources and sold under The Gap€™s name brands. The following operating data (in millions) were adapted from the 2005 SEC 10-K filings of The Gap Inc. for the years ending January 29, 2005, and January 31, 2004:

1. Compute EBITDA for 2005 and 2004.
2. Compute the ratio of EBITDA to interest expense for 2005 and 2004. Round to one decimal place.
3. Based upon (1) and (2), discuss the trends in EBITDA and the ratio of EBITDA to interest expense.
4. Is EBITDA normally the same as the amount reported for net cash flows from operating activities?Explain.

2005 Net sales Costs and expenses: $16,267 $15,854 Cost of goods sold Other expenses 9,886 9,885 4,285 1,684 653 1,031 $ 675 S 234 $1,872 Operating income Income taxes Net income (loss) Depreciation and amortization Interest expense 722 1,150 S620 $ 167