Definition
Cash burn rate is the speed at which a company depletes its cash reserves, typically measured monthly or quarterly. It helps determine a company�s financial runway�the time remaining before it runs out of cash.
Related Services
Financial modeling, business forecasting, and investor reporting services assist companies in tracking their burn rate. Startups often use burn rate analysis to determine funding needs and budget adjustments.
Problem and Application
A high burn rate without sufficient revenue growth or investment can put a company at risk of running out of funds. Businesses need to strike a balance between growth and financial sustainability by managing expenses and securing timely funding.
Conclusion
Monitoring the cash burn rate is essential for financial planning. Keeping burn rate in check ensures that a business remains financially viable and well-positioned for long-term success.
