What should be analyzed to judge whether the financial cash flow of an enterprise is healthy?

Judging whether the cash flow of an enterprise is healthy or not depends on three aspects: first, cash flow, second, profitability, and third, risk control ability. Whether there is cash flow determines whether an enterprise can survive, and whether there is profit determines whether an enterprise can accumulate capital for future development. Risk control system is the key factor to protect the stable development of enterprises.

How to analyze cash flow?

Cash flow is the blood of an enterprise, which determines its life and death. So what indicators do we look at for the healthy cash flow of enterprises? Look at three indicators.

1. Net cash flow.

The so-called total net cash flow is the value obtained by subtracting all cash outflows from all cash inflows in a year, that is, the item of "net increase of cash and cash equivalents" in the enterprise cash flow statement. If the result is positive, it means that the enterprise has a cash surplus at least in that year, regardless of its operation, investment and fund-raising activities in that year. If it is negative, it means that you can't make ends meet.

2. Net cash flow from operating activities.

The net cash flow from operating activities is the net cash inflow from all operating activities minus the net cash outflow in the current year, that is, the "net cash flow from operating activities" item in the cash flow statement.

Business activities are the foundation of getting up. A normal business enterprise cannot always rely on financing and investment to survive. Only the cash flow from your own business is a long-term solution. So it depends on the net cash flow generated by operating activities. If it is positive, it means that the business activities of the enterprise are good; If it is negative, it means that the cash flow created by the business activities of the enterprise is insufficient. If the net cash flow of an enterprise's operating activities is negative for a long time, it shows that its finance is unhealthy and there are great problems.

3. "Cash received from selling goods and providing services".

This indicator is the first item of cash flow from operating activities. The reason why this indicator is extremely important is that in the cash flow of operating activities, there may be some current payments from affiliated companies or some non-operating income and expenditure funds included in the cash flow of operating activities, and once the amount of these funds is too large, it will lead to the numerical distortion of the net cash flow of operating activities.

Therefore, I propose that when analyzing the cash flow of business activities, we should analyze whether the "cash received from selling goods and providing services" is sufficient, whether it continues to flow in, and whether it matches the scale and growth rate of operating income.