1/ The simple funda is to "follow the cash". https://twitter.com/rohitchauhan/status/1324091489497026561

2/ Check one: Is Operating Profit getting converted into Operating Cash? Has Working Capital requirement increased / decreased?

3/ Check two: Where is Operating Cash going? If it's into Maintanence Capex, what's the RoCE of existing business? If it's for new Capex, what's the IRR of the new or extra business? Is the RoCE / IRR above the Cost of Capital?

4/ Check three: If there's Cash leftover after that, where is it going? Are acquisitions possible? If yes, what's the IRR or average RoCE of that business? Is it above the Cost of Capital?

5/ Check four: If Acquisitions are not possible, is there a possibility of expansion / new Capex in the future? If yes, storing cash in Financial Assets makes sense.

6/ Check five: If both are not possible, is the management considering a Buyback? Do they have a Buyback policy to take advantage of reasonable or low prices in the market for their shares? Ideally, the Cost of Capital should be used to assess attractiveness of Buybacks.

7/ Check six: Is there a possibility of Debt reduction? If Debt is small compared to Equity or Cost of Debt is low, it may even be good to have it. If it's higher (Say >50%) or Cost of Debt is high, reducing it may increase the RoCE.

8/ Check seven: If nothing is possible, is the management willing to pay out Dividends? If not, what's the reason for the hold up? If the Cash is rotting in Financial Assets, it may destroy Value for Shareholders.

9/ Check eight: How's the overall Cashflow picture compared to peers? If it's considerably better or worse, what's the reason?

10/ END. Of course, these are just the basic questions regarding cash. A sanity check, if you will. A thorough understanding of the business is required to judge the Cashflows in a better manner.