How To Calculate Cash Burn in Blackbaud | Arithmix

Calculating cash burn is an important financial metric for any company, including Blackbaud. It helps to determine how much cash a company is spending each month and how long it can sustain its operations before running out of cash. In this article, we will discuss what cash burn is, when it is valuable to calculate it, and how to calculate it for Blackbaud.

What Is Cash Burn?

Cash burn is the rate at which a company is spending its cash reserves. It is calculated by subtracting the total cash outflows from the total cash inflows over a specific period of time. Cash outflows include expenses such as salaries, rent, and other operating costs, while cash inflows include revenue from sales, investments, and financing activities.

Cash burn is an important metric for startups and other companies that are not yet profitable. It helps to determine how long a company can continue to operate before it runs out of cash. Investors and lenders also use cash burn to evaluate a company's financial health and its ability to repay debt.

When Is It Valuable To Calculate Cash Burn?

It is valuable to calculate cash burn in several situations. For example, if a company is planning to raise capital, it needs to know its cash burn rate to determine how much funding it needs and how long it will last. Similarly, if a company is experiencing financial difficulties, it needs to know its cash burn rate to identify areas where it can cut costs and improve its financial position.

Cash burn is also valuable for investors who are considering investing in a company. By calculating cash burn, investors can evaluate the company's financial health and its ability to sustain its operations. They can also use cash burn to compare different companies and make informed investment decisions.

How to Calculate Cash Burn for Blackbaud

To calculate cash burn for Blackbaud, you will need to gather the company's financial statements for a specific period of time, such as a quarter or a year. You will also need to identify the company's cash inflows and outflows during that period.

To calculate cash inflows, you can add up the company's revenue from sales, investments, and financing activities. To calculate cash outflows, you can add up the company's expenses, such as salaries, rent, and other operating costs.

Once you have identified the company's cash inflows and outflows, you can subtract the total cash outflows from the total cash inflows to determine the company's cash burn rate. For example, if Blackbaud had $10 million in cash inflows and $12 million in cash outflows during a quarter, its cash burn rate would be -$2 million per quarter.

It is important to note that cash burn is not always a negative number. If a company has more cash inflows than outflows, its cash burn rate will be positive, indicating that it is generating cash instead of burning it.

In conclusion, calculating cash burn is an important financial metric for any company, including Blackbaud. It helps to determine how much cash a company is spending each month and how long it can sustain its operations before running out of cash. By following the steps outlined in this article, you can calculate cash burn for Blackbaud and use it to evaluate the company's financial health and its ability to sustain its operations.

How Do You Calculate Cash Burn in Blackbaud

Blackbaud itself isn’t naturally geared towards letting you calculate complex metrics like Cash Burn. As an alternative, teams typically use products like Arithmix to import data from Blackbaud and build out dashboards.

What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like Blackbaud, combine it with data from other systems, and create calculations like Cash Burn.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.

Arithmix is fully collaborative, giving your entire team access to your numbers and the ability to work together seamlessly.

Calculating Cash Burn in Arithmix

Calculating metrics like Cash Burn is simple in Arithmix. Once you've created your free account, you’ll be able to import your Blackbaud data, and use it to create natural language formulas for metrics like Cash Burn.

Arithmix is designed to give you the power to build any calculations you want on top of your Blackbaud data, while also being easy to use and collaborate on. You can share your dashboards with users inside and outside of your organisation, making it easy to empower your whole team.