First of all, it should be read against the balance sheet and income statement of the enterprise. We know that the current accounting system recognizes income and expenses on the basis of accrual basis, and the preparation of enterprise's balance sheet and income statement also follows this principle. The disadvantage of this system is that it cannot directly reflect the flow of cash and cash equivalents of enterprises, and the cash flow statement just makes up for this deficiency.
Second, we should study the classification structure of cash flow statement and carefully analyze the final influence of each component on total cash flow. Generally speaking, the net cash flow generated by operating activities should be positive, because the cash of an enterprise should be mainly obtained from operating activities. If the net cash flow generated by operating activities is negative, it will arouse our great attention and should be traced back to the source.
Third, the cash flow of an enterprise should be judged historically in the process of its continuing business activities. Enterprise management is a continuous process, so the financial situation of an enterprise is always in a constantly changing process. The bad situation of enterprises in a certain period of time can be changed through hard work. Like the Xianyang deflection report mentioned above, enterprises can increase the cash inflow of business activities as long as they increase their debt repayment efforts; The company has a 10∶3 rights issue plan to be approved. If it can be implemented smoothly, it will also change the situation that fund-raising activities depend entirely on borrowing.
Finally, the reading of the cash flow statement should be combined with other materials, such as reading statements and notes, understanding the relevant background of the industry and the company, and understanding other information about the company in the media, so as to directly deepen the understanding of the cash flow statement. For example, if the cash of an enterprise's investment activities is negative, we can further investigate whether it has brought good project investment, project progress and development prospects by reading other information disclosures other than the financial statements of listed companies, so as to further judge the overall management quality and management level of the enterprise.