The increase in inventory is a deduction: if inventory rises, more inventory is purchased so cash falls.It is not a cash expense, however, the purchase of a non-current asset gives rise to a cash outflow and this would have been reflected under investing activities in the year of purchase. Depreciation and amortization is added back to net income as it was deducted in arriving at that figure. ![]() The cash flow from operating activities is built as follows:
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