Refer to the financial statements and related disclosure notes of PetSmart Inc. located in the company's annual report for the fiscal year ending February 2, 2014 included with all new copies of this textbook. You also can locate the report online at www.PetSmart.com.

Notice that PetSmart's net income has increased over the three years reported. To supplement their analysis of profitability, many analysts like to look at "free cash flow." A popular way to measure this metric is "structural free cash flow" (or as Warren Buffett calls it "owner's earnings"), which is calculated as net income from opera-tions plus depreciation and amortization minus capital expenditures.

Required:

Determine free cash flows for PetSmart in each of the three years reported. Compare that amount with net income each year. What pattern do you detect?