Like Maotai, the profit is very high, the cash on hand is abundant, and a large amount of money is paid back in advance.
Some enterprises have high profits, but the money they earn is a lot of accounts receivable, that is, a lot of liabilities, which shows that enterprises lack the right to speak in their business activities, and some enterprises are radical in their operations and rely on products to sell on credit to gain market share. This distribution method may not be able to collect the payment, resulting in a large number of bad debts, and finally they have to count the losses. There is also a kind of development with money, typically some infrastructure companies give money to developers. Giving money to some owners, such as garden companies, has a great demand for funds. If we can't keep financing, our operation will be very radical, and it is very likely that the capital chain will break, resulting in operational risks.
Compared with profit, cash flow may be more related to the life and death of the enterprise. The profit is low, the cash flow is stable, and the company has no risk. However, once the cash flow breaks, no matter how high the profit is, there will be poor turnover, operational difficulties and even bankruptcy of the company.
Therefore, paying attention to the company's financial report depends not only on the company's profits, but also on whether the cash flow is stable. If the cash flow is negative and the cash continues to flow out, such a company might as well stay away. 、