The statement of cash flows for Chico€™s FAS, Inc., for the years ended January 31, 2009, February 2, 2008, and February 3, 2007, appears on the following page.
CHICO€™S FAS, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

Answer the following questions:
1. Does Chico€™s use the direct or the indirect method of preparing the statement of cash flows?
2. Did receivables increase or decrease during the most recent fiscal year?
3. Why is depreciation, a noncash expense, included on the statement of cash flows?
4. On two of the three years€™ statements, inventory is shown as a negative number (subtracted). Describe what happened to the balance in the inventory account during each of those years.
5. Did the balance in accounts payable increase or decrease during the most recent year? Explain.
6. Do you think Chico€™s is expanding? Find some numbers to support your answer.
7. Calculate Chico€™s free cash flow for all three years. What do these values indicate?
8. Do you see any particular risks indicated by Chico€™s cash flowpatterns?

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Fiscal Year Ended Jamuary , February 2, February 3, (in thousands) CASIH FLOWS FROM OPERATING ACTIVITIES 2007 Net (loss) income. . Adjustments to reconcile net (loss) income to net cash provided by operating activities- Depreciation and amortization, cost of goods sold8,782 10,386 81,593 (6,636) (22,324) n and amortization, other 88,790 61,840 Deferred tax benefit Stock-based compensation expense, cost of goods sold Stock-based compensation expense, other. Excess tax benefit from stock-based 2,769 9,821 4,909 12,171 6.004 15,237 (100) 6,060 (209) (2,366) 6,867 6,752 Deferred rent expense, net Goodwill impairment . . Gain on sale of investment Impairment of long-lived assets Loss (gain) on disposal of property and (6,833) 13,691 (908) (18,770) (4,617) (32,388 (14,696) Decrease (increase) in assets- 3,766 Recelvables, net Income tax receivable Inventories Prepaid expenses and other... 11,847 4,224 (3,96) (3,676) (Decrease) increase in liabilities- Accounts payable Accrued and other deferred liabilities (22,488) (L 100) 24,119 7.532 46,787 Total adjustments .- Net cash provided by operating activities CASII FLOWS FROM INVESTING ACTIVITIES: .(E69,368) (1,212,894) (162,690) ,894 Purchases of marketable securities Proceeds from sale of marketable securities Purchase of Fitigues assets Purchase of Minnesota franchise rights and stores Acquisition of other franchise stores Proceeds from sale of land Proceeds from sale of investment Purchases of property and equipment .687,809 1,190,761 325 (32,896) 6,361) 13,426 811 15,090 (104.615) [202.223) (218.311) 86,164) 236.09T (63.446) 6.402 2,366 Net cash used in investing activities CASII FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of comon stock Excess tax benefit from stock-based compensation Cash paid for deferred financing costs Repurchase of common stock 306 3,533 (629) Net cash (used in) provided by financing activities Net increase (decrease) in cash and cash (534) 3048 191.381) (23,402) 34,168 13,801 37.2033.036 ents CASII AND CASII EQUIVALENTS, Beginning of period CASII AND CASII EQUIVALENTS, End of period SUPPLEMENTAL DISCLOSURES OF CASII FLOW 26,549 37.203 INFORMATION Cash paid for interest Cash paid for income taxes, net $461 $ 13,591 74,563串106,646 NON-CASIT INVESTING AND FINANCINGACTIVITIES: $26,834 Receipt of note receivable for sale of land Receivable from sale of equity investment . . . . 2,161 The accompaning notes are an integral part of hese gtatements.