How To Calculate Cash Burn in ProfitBooks | Arithmix

Calculating cash burn is an essential part of managing your business finances. It helps you understand how much money you are spending each month and how much cash you have left to cover your expenses. Cash burn is the amount of money your business is losing each month, and it is calculated by subtracting your monthly expenses from your monthly revenue.

What Is Cash Burn?

Cash burn is a term used to describe the rate at which a company is spending its cash reserves. It is a critical metric for startups and early-stage businesses that are still in the process of building their customer base and generating revenue. Cash burn is calculated by subtracting the total expenses of a company from its total revenue. If the result is negative, it means that the company is losing money and burning through its cash reserves.

It is important to note that cash burn is not the same as net income. Net income is the profit or loss a company makes after deducting all expenses from its revenue. Cash burn, on the other hand, only takes into account the cash flow of a company and does not include non-cash expenses such as depreciation and amortization.

When Is It Valuable To Calculate Cash Burn?

Calculating cash burn is valuable for businesses that are in the early stages of development and are not yet profitable. It helps them understand how much money they are spending each month and how much cash they have left to cover their expenses. This information is critical for startups that are looking to raise funding from investors or lenders.

Calculating cash burn is also valuable for established businesses that are experiencing financial difficulties. It helps them identify areas where they can cut costs and reduce their cash burn rate. By reducing their cash burn rate, they can extend their cash reserves and improve their chances of survival.

In conclusion, calculating cash burn is an essential part of managing your business finances. It helps you understand how much money you are spending each month and how much cash you have left to cover your expenses. By keeping a close eye on your cash burn rate, you can make informed decisions about your business and improve your chances of success.

How Do You Calculate Cash Burn in ProfitBooks

ProfitBooks 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 ProfitBooks 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 ProfitBooks, 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 ProfitBooks 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 ProfitBooks 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.