A decrease in Inventory will be added back to net income when determining net cash flow provided by operating activities on the statement of cash flows.
Inventory is known to bring about cashflow and as such, an increase in inventory goods will be seen as a negative amount found in the cashflow statement, showing cash outlay.
Note that in the use of the indirect method to report cash flows from operating activities, a decrease in the inventory account will be added back to net income to be able to come to the net cash flow that is given by operating activities.
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