Burn Rate
The rate at which a business spends down its cash reserves over time, typically measured monthly, before it becomes cash-flow positive.
Burn rate is most often discussed in the context of early-stage or growth-focused businesses that are intentionally spending ahead of revenue, and it’s calculated as the net decrease in cash from one period to the next.
Lenders and investors use burn rate together with cash on hand to calculate runway, since a high burn rate against limited reserves signals a shorter window before the business needs new financing or has to cut costs.
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