The

following are statements about the calculation of free cash flow (FCF) and

EBIT:

1. When depreciation expense increases

compared to an earlier period, EBIT decreases but FCF increases.

2. When accounts payable increases compared

to an earlier period, EBIT increases and FCF increases.

3.

When accounts receivable increases

compared to an earlier period, EBIT decreases and FCF increases.

4.

When inventories increase compared to an earlier period, EBIT doesn't change

and FCF decreases.

Which combination is most correct?