Blackbaud Inc (BLKB)

The liquidity ratios of Blackbaud Inc, as represented by the current ratio, quick ratio, and cash ratio, have shown fluctuating trends over the past five years.

1. Current Ratio:
The current ratio measures the company's ability to meet short-term obligations with its current assets. Blackbaud's current ratio has ranged from 0.74 to 0.81 over the last five years, indicating a relatively low level of liquidity. A current ratio below 1 suggests that the company may have difficulty meeting its short-term liabilities with its current assets alone.

2. Quick Ratio:
The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Blackbaud's quick ratio has ranged from 0.17 to 0.23 during the same period. The downward trend in the quick ratio implies a decreasing ability to cover immediate liabilities without relying on inventory liquidation.

3. Cash Ratio:
The cash ratio specifically focuses on the company's ability to pay off short-term obligations using only its cash and cash equivalents. Blackbaud's cash ratio has ranged from 0.09 to 0.14 over the past five years. While the cash ratio is higher than the quick ratio, indicating a more conservative measure of liquidity, the downward trend suggests a decreasing ability to cover short-term obligations solely with cash assets.

In summary, Blackbaud Inc's liquidity ratios indicate a concerning trend of decreasing liquidity over the past five years, as reflected in the current ratio, quick ratio, and cash ratio. This may raise potential concerns about the company's ability to meet its short-term financial obligations without resorting to external funding sources.

---

Additional liquidity measure

The cash conversion cycle of Blackbaud Inc has displayed variability over the past five years. In 2023, the company's cash conversion cycle increased to 17.30 days from 6.81 days in 2022, indicating a longer period for the company to convert its investments in inventory and other resources into cash inflows. This could suggest potential challenges in efficiently managing working capital and liquidity in the most recent period.

Comparing 2023 to previous years, the cycle was notably longer than in 2020, where it stood at 14.52 days. However, it was shorter than in 2021, when it was at 22.63 days, indicating better working capital management that year despite the recent increase.

It is crucial for the company to monitor and potentially improve its cash conversion cycle to ensure a healthy cash flow position and efficient operations moving forward.