Refer to Polaris's statement of cash flows in Appendix A.

(a) Which method is used to compute its net cash provided by operating activities?

(b) Its balance sheet shows an increase in accounts (trade) receivables from 2010 to 2011; why is this increase in accounts (trade) receivables subtracted when computing net cash provided by operating activities for the year ended December 31, 2011?

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POLARIS INDUSTRIES INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the Year Ended December 31 (In thousands) 2011 2010 2009 Operating Activities Net income Adjustments to reconcile net income to net cash provided by operating activities: $ 227,575 $147,138 $ 101,017 (Gain) loss on securities available for sale (825) 66,519 18,052 8,952 64,593 10,226 Depreciation and amortization Noncash compensation Noncash income from financial services Noncash expense from other affiliates Deferred income taxes. Tax effect of share-based compensation exercises Changes in current operating items: Trade receivables 66,390 20,548 (4,574) 1,376 (16,946) (16,888) (23,120) (10,610) (4,444) 133 (4,021) 382 13,573 410 (23,115) (49,973) (56,612) 27,232 8,192 42,997 1,111 Inventories Accounts payable Accrued expenses Income taxes payable/receivable . Prepaid expenses and others, net. Net cash provided by operating activities 37,580 (40,329) (24,759) 7,325 4,643 80,668 107,363 (1,343) (1,075) 7,033 956 302,530 297,619 193,201 Investing Activities Purchase of property and equipment . Investments in finance affiliate (84,484) (55,718) (43,932) (12,588) 11,950 (5,000) 876 (9,173) 17,910 (3,007) 17,261 Distributions from finance affiliate Investment in other affiliates. Proceeds from sale of investments 9,061 Acquisition of businesses, net of cash acquired (51,899) (4,738) Net cash used for investment activities (141,145) (42,118) (29,678) Financing Activities Borrowings under credit agreement / senior notes Repayments under credit agreement Repurchase and retirement of common shares Cash dividends to shareholders.. Tax effect of proceeds from share-based compensation e xercises Proceeds from stock issuances under employee plans 364,000 (364,000) (4,556) (61,585) (53,043) (50,177) (410) 4,733 100,000 (202,333) (132,372) (27,486) 23,120 45,654 10,610 68,105 Net cash used for financing activities Impact of currency exchange rates on cash balances (227,516) (2,460) (1,814) (50,410) Net increase (decrease) in cash and cash equivalents (68,591) 253,687 113,113 Cash and cash equivalents at beginning of period 393,927 140,240 27,127 Cash and cash equivalents at end of period $ 325,336 $393,927 $ 140,240 Supplemental Cash Flow Information: Interest paid on debt borrowings . 3,350 $ 2,813 $ 3,966 Income taxes paid $ 132,088 $ 81,142 $ 29,039