Circuit City is the nation€™s largest retailer of brand-name consumer electronics and major appliances. Its headquarters are in Richmond, Virginia. The company€™s comparative statements of cash flows from a recent annual report are shown below.

Required
Answer the following questions.
A. For the three years shown, compare the trend in net income to the trend in cash provided by operations.
B. What were the three most significant reasons that cash provided by operations was positive for fiscal 2002?
C. Inspect the information shown under investing activities. Also note the amount of depreciation and amortization reported under operating activities. Does this company€™s long-term asset base appear to be expanding, shrinking, or staying about the same size? Explain youranswer.

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Circuit City Stores, In. Consolidated Statements of Cash Flows Years Ended February 28 or 29 In thousands) OPERATING ACTIVITIES: $ 218.795 $160,802 S 197,590 Net eanings Adjustments to reconcile net earnings to net cash provided by operating activities of continuing operations: Loss from discontinued operations Loss on disposal of discontinued operations Depreciation and amortization Unearned compensation amortization of restricted stock Loss on disposition of property and equipment Provision for deferred income taxes Changes in operating assets and liabilities, net of effects 18,215 114,025 150,711 153,090 148,104 12,096 17 43,053 15,678 13,735 31,186 11,365 4,674 19,765 from business acquisitions: (Increase) decrease in net accounts receivable and retained Decrease (increase) in inventory Decrease (increase) in prepaid expenses and other current assets (Increase) decrease in other assets Increase (decrease) in accounts payable, accrued expenses and (140,760) 7,541 (18,922) 124,337 (67,855 184,507) 16.312 (41,426) 81,316 240 (720) 1012 other current liabilities and accrued income taxes Increase (decrease) in deferred revenue and other liabilities 330.774 (04,193) 244,559 18 17.855 15,565 NET CASH PROVIDED BY OPERATING ACTIVITIES OF CONTINUING OPERATIONS 837208 107120 638,281 Cash used in business acquisitions Purchases of property and equipment Proceeds from sales of property and equipment, net NET CASH USED IN INVESTING ACTIVITIES (1,325) (34,849) (213,997) (285,55) 222,268) 187 420 115,69 100,151 OF CONTINUING OPERATIONS (26,571) 171,180 156,968) FINANCING ACTIVITIES: Proceeds from (payments on) short-term debt, net Principal payments on long-term debt Issuances of Circuit City Group Common Stock, net Issuances of CarMax Group Common Stock, net Proceeds from CarMax Group Common Stock offering, net Dividends paid on Circuit City Group Common Stock NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 9,037 1,805) (5,011) (132.388) (178,060 2,707) 6,942 17,920 26,912 139,546 (14,556) (14346) (14,207 OF CONTINUING OPERATIONS CASH USED IN DISCONTINUED OPERATIONS INOTE 15] Increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 17.601 167.562) 13069) 174 (90,193) 605,401 197,802) 378,053 446,131 643.933 265,880 $440.131 $ 043,933