=+7. D. R. Horton is a custom homebuilder located mainly in the southern and western parts of the United States. It is the third largest home-

builder in the country. Through 1998 the company claimed 21 consec-

utive years of growth. Over the years, many other homebuilders have been acquired.

Shown below are (1) new sales contracts and sales backlog, (2) a sum-

mary of consolidated SCFs for the years ending September 30, 1996 through 1998 and (3) consolidated statements of income for years end-

ing September 30, 1996 through 1998 (all numbers are in thousands).

Required:
a.
Since D. R. Horton's net cash flows from operations are decreasing significantly, does this indicate that the company is in "trouble?"