The amount reported as (Increase)/decrease in inventories in the reconciliation section of the statement of cash flows should tie to the difference reported in inventories between the previous fiscal year and the current fiscal year as reported on the balance sheet.
For instance, if inventories at year end for the previous year were $48,000 and at current year-end were $46,000, $2,000 should be added back in the reconciliation (since it is a decrease in asset balance).