How to analyze the cash flow statement

(A) the cash flow statement can explain the reasons for cash inflows and outflows in a certain period of time. If the enterprise borrows 6,543,800 yuan from the bank in the current period and repays 60,000 yuan of bank interest, the cash flow generated by fund-raising activities in the cash flow statement reflects 6,543,800 yuan of borrowing and 60,000 yuan of interest payment respectively. This information cannot be provided by the balance sheet and income statement. (2) The cash flow statement can explain the solvency of the enterprise and the ability to pay dividends. Usually, report readers pay more attention to the profits of enterprises, and often take profits as the measurement standard. The profit of the enterprise shows that the enterprise has certain cash payment ability to a certain extent. However, the profits made by an enterprise in a certain period of time do not mean that the enterprise really has the ability to repay debts or pay. In some cases, although the operating performance reflected in the enterprise's income statement is considerable, it is financially difficult to repay the debts due; There are also some enterprises that have sufficient solvency although the operating performance reflected in the income statement is not impressive. There are many reasons for this situation, among which accrual basis and matching principle adopted in accounting are also one of the main reasons. The cash flow statement is completely based on cash receipts and payments, excluding the profitability and ability to pay caused by the estimates used in accounting. Through the cash flow statement, we can understand the composition of cash inflow of enterprises, analyze the ability of enterprises to pay debts and pay dividends, and enhance the investment confidence of investors and the confidence of creditors to recover their claims. (3) The cash flow statement can analyze the enterprise's ability to obtain cash in the future. The cash flow generated by operating activities in the cash flow statement represents the ability of enterprises to create cash flow by using their economic resources, which is convenient for analyzing the difference between the net profit generated in a certain period and the cash flow generated by operating activities; The cash flow generated by investment activities represents the ability of enterprises to use funds to generate cash flow; The cash flow generated by fund-raising activities represents the ability of enterprises to raise funds to obtain cash. Through the cash flow statement and other financial information, we can analyze the ability of enterprises to obtain or pay cash in the future. For example, the funds raised by enterprises through bank loans are reflected in the current cash flow statement as cash inflows, but it means that cash will flow out when loans are repaid in the future. For another example, the uncollected receivables in the current period are not reflected as cash inflows in the current cash flow statement, but it means that there will be cash inflows in the future. (D) The cash flow statement can analyze the impact of enterprise investment and financial management activities on operating results and financial status. The balance sheet can provide the financial status of an enterprise on a certain date, but it provides static financial information, which cannot reflect the reasons for the changes in financial status, nor can it show how much cash these assets and liabilities have brought to the enterprise and how much cash they have used; Although the income statement reflects the operating results of an enterprise in a certain period and provides dynamic financial information, it can only reflect the composition of profits, but it can't reflect how much cash the business activities, investment and financing activities have brought and paid to the enterprise, nor can it reflect all the matters of investment and financing activities. The cash flow statement provides the dynamic financial information of cash inflow and outflow in a certain period, indicating the cash obtained by enterprises from business activities, investment and financing activities during the reporting period, and how the cash obtained by enterprises is used. It can explain the reasons for the changes of assets, liabilities and net assets, and plays a preliminary role in the balance sheet and income statement. Cash flow statement is the bridge between continuous balance sheet and income statement. (5) The cash flow statement can provide information about investment and financing activities that do not involve cash. The cash flow statement not only reflects the investment and financing activities related to cash, but also provides information about investment and financing activities unrelated to cash through notes, so that users of accounting statements can fully understand and analyze the investment and financing activities of enterprises. It is worth noting that although the analysis of cash flow statement can provide a lot of information about enterprise finance, especially about enterprise cash flow, it does not mean that the analysis of cash flow statement can replace the analysis of other accounting statements, and the analysis of cash flow statement is only one aspect of enterprise financial analysis. And like any analysis, cash flow statement analysis also has its limitations, which are mainly manifested as: (1) the validity of the report information. The data reflected in the report is the result of the influence of the past accounting events of the enterprise, and the various analysis results calculated according to these historical data are only of reference value and are not completely effective in predicting the future cash flow of the enterprise; (2) Comparability of reported information. Comparability generally means that different enterprises, especially different enterprises in the same industry, should use similar accounting procedures and methods to establish cash flow statements of different enterprises on the same accounting procedures and methods, so as to facilitate the report users to compare and analyze the solvency and cash flow status of an enterprise in different periods and between enterprises. For the same enterprise, although the application of consistent accounting principles makes it possible to compare in different periods, if the accounting environment and the nature of the basic transaction of the enterprise change, the comparability of financial information of the same enterprise in different periods will be greatly weakened. For different enterprises, the comparability between them is more difficult to achieve than that of a single enterprise. Because different enterprises adopt different accounting treatment methods, such as inventory valuation, depreciation and amortization, income recognition, expenditure capitalization, expense treatment, etc., it is difficult to compare the cash situation of various enterprises with various analysis methods. (3) Reliability of reporting information. Reliability means that the financial information provided should be fair, based on objective facts, not influenced by subjective will, and strive to be accurate and reliable. In fact, the reliability of all kinds of data used in compiling cash flow statement is often affected by many aspects, which makes the report analysis unreliable. Therefore, investors must not rely entirely on the results of report analysis, but should combine other relevant information for comprehensive evaluation. This is mainly manifested in the following aspects: First, to fully grasp the information, we should not only fully understand the information in the statements, but also pay attention to the disclosure of major accounting matters of enterprises and the audit reports of certified public accountants, and also consider the influence of national macro policies, international and domestic political climate, and industry changes. It is necessary not only to analyze the cash flow statement, but also to organically combine the balance sheet, income statement and other statements to comprehensively and profoundly reveal the achievements and existing problems of enterprises in terms of solvency, profitability, operating performance and operating activities; Second, the combination of concrete analysis and comprehensive evaluation. On the basis of comprehensive evaluation, investors should choose specific projects for key analysis, such as the cash ratio (net cash flow in operating activities/current liabilities) reflecting the solvency of enterprises, and take care of the conclusions of comprehensive analysis and key analysis to ensure the effectiveness of the analysis results. (Hu Yonggui)