Save More, Inc., a discount department store, has applied to its bankers for a loan. Although the company has been profitable, it is short of cash. The loan application includes the following information about current assets, current liabilities, net income, depreciation expense, and dividends for the past five years. (All numbers are rounded to the nearest thousand, with the 000's omitted.)

As a bank loan officer, you have been asked to review these figures in order to determine whether the bank should loan money to Save More.
1. Compute the net cash flows from operations for the last four years.
2. What caused the sudden decrease in cash flows from operations?
3. What factors would you focus on, and what additional information would you need before deciding whether to make theloan?

Dec. 31, 2007 Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2010 Dec. 31, 2011 Cash and cash equivalents.. Accounts receivable (net). Inventory Accounts payable Net income. Depreciation expense Dividends paid $158 576 385 253 440 60 211 $ 73 555 142 17 492 50 $ 10 516 383 281 467 55 208 S (189) 654 403 253 19 454 50 177 1,022 52 481 60 211 197