This year's physical Inventory amount is $50,000. Last year's physical Inventory amount was $65,000. Comparing these two amounts, you need to determine its impact on your cash flows from these operating activities. Which one of the following describes it most appropriately? Since the amount of inventory has decreased, the company must have saved its Cash. Thus, its Cash flows must have increased. Since inventory is an Asset item on hand after making the payment, Cash Flows are not affected. Since the amount of inventory on hand has increased during the past one year, the company's Cash Flows must have also decreased. Since Inventory is used for generating Revenues, it will increase future Cash Flows