Definition
Cash burn refers to the rate at which a company spends its available cash reserves to cover expenses. It is commonly used to assess how long a company can sustain its operations before needing additional funding.
Related Services
Startup financial consulting, investor advisory, and business budgeting services help companies track and manage cash burn. CFOs and financial analysts use cash burn metrics to strategize cost control and funding requirements.
Problem and Application
Excessive cash burn without a clear path to profitability can lead to financial instability. Businesses must carefully manage expenses, optimize revenue streams, and secure funding before running out of cash. Investors and lenders closely monitor cash burn when evaluating a company's sustainability.
Conclusion
Cash burn is a crucial financial metric for startups and high-growth companies. Managing it effectively ensures business longevity and strengthens investor confidence in a company�s ability to scale.
