The statement of cash flows for Rowe Furniture Corporation is shown below. Based in Salem, Virginia, the firm manufactures upholstered household furniture including sofas, sofa beds, and chairs.

Required
Use the statement of cash flows to answer the following questions.
A. What were Rowe€™s primary sources of cash in 2001? Were these different than in the prior two years?
B. What were Rowe€™s primary uses of cash in 2001? Were these different than in the prior two years?
C. What were the primary reasons for the decrease in cash flow from operating activities between 2000 and 2001?
D. Evaluate Rowe€™s cash flows over the period shown. Has the company been able to finance its growth, dividends, and acquisition of treasury stock out of cash flow from operations? Explain.
E. Over the past three years, what were the primary reasons that cash flows from operations differed so much from net income?
F. The portion of the statement titled €œReconciliation of net earnings to net cash provided by operating activities€ is a required disclosure. Of what does this section and presentation remind you? Might this disclosure requirement help explain why so few companies use the direct method?Explain.

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The Rowe Companies Annual Report 2001 Reconciliation of Net Earnings (Loss) to Net Cash Provided by (Used In) Operating Activities: Year Ended 12/2/01 (52 weeks) 11/28/99 (52 weeks) (53 weeks) (in thousands) S 3,544 $ (6,189) Net earnings (loss) Adjustments to reconcile net earnings (loss) to net S13,901 cash provided by (used in) operating activities, net of acquisition and disposition of businesses Loss on disposition of Wexford Depreciation and amortization Provision for deferred compensation Payments made for deferred compensation Deferred income taxes Provision for losses on accounts receivable Loss (gain) on disposition of assets 8,569 173 (813) 1,001 4,421 5,455 8,581 816 (160) (2,099) 1,485 6,165 1,083 (319) (472) 413 4 Change in operating assets and liabilities net of effects of acquisition and disposition of businesses 4,649 5,564 Decrease (increase) in prepaid expenses and other Decrease (increase) in other assets Increase (decrease) in accounts payable Increase (decrease) in accrued expenses Increase (decrease) in customer deposits 1,679 (352) 10,277) (4,433) (887) 472 (4,750) (1,715) (1,105) 10,854 (9,379) (5,692) (795) (1,210) 3,830 2,170 Total adjustments 4,456 Net cash provided by (used in) operating activities $12.124