The Digital Express Company disclosed a net income of $12,000 on revenues of $400,000 for fiscal year ending December 31, 2007. The company had $500,000 of 6% debt outstanding during the year. In addition, the company had depreciation and amortization expenses of $32,000. The company’s 2007 tax rate was 40%. The management believes a pro forma disclosure of EBITDA would be useful to investors.

a. Determine EBITDA for 2007.

b. Determine net income divided by sales and EBITDA divided by sales for 2007.

c. What disclosure must management provide in addition to the pro forma EBITDA calculations?