"Zij leest het boek."
Translation:She reads the book.
You have to look at how the verb following the subject is conjugated.
If it is conjugated in the singular, then you know that "zij" is "she".
If it is conjugated in the plural, then you know that "zij" is "they".
So if it were "They read the book." you would have "Zij lezen het boek."
So "lezen" turns into "les-" with the singular pronouns? How often does this kind of consonant change occur in Dutch conjugations? (any more that we should know about?)