1. BlackBox Co. had sale $10000 last year. The cost of goods sold was $6500, general and administrative expenses were $1000, interest expenses were $500, and depreciation was $1000. The firms tax rate is 35%. Please calculate EBIT, Net Income and Cash flow from operation. [Hint: cash flow from operation is equal to net income plus depreciation expense because it is a non-cash expense and should be added back when calculating cash flow.]

2. During the last year of operation, account receivable increased by $10000, account payable decreased by $7000, and inventories decreased by $2000. What is the total impact of these changes on the difference between profit and cash flow?

3. Cisco Co. sells $1 billion marketable securities and use the money to buy inventories. What will happen to this firms current ratio? How about its quick ratio?